Ad Tiers and Original Series Driving UK SVOD Market
Despite a contraction in the number of UK households paying for streaming services, the importance of original content to keeping and attracting subscribers is reinforced in new figures from consultancy and data analyst Kantar.
In its latest quarterly Entertainment on Demand study of the UK’s SVOD market, Kantar found Netflix continuing to dominate content discovery in the UK, with more than half of all VOD subscribers choosing Netflix as their first port of call to find new content to watch, marginally up from a year ago.
Generating national headlines, the UK-based drama Baby Reindeer was a domestic and global hit, which translated into the country’s most enjoyed show during the second quarter. The show alone was responsible for attracting 8% of new subscribers, noted Kantar. The latest installment of period drama, Bridgerton, was the top show in June, helping Netflix grow its subscriber share over the same point in 2023.
Netflix: Solid Subscriber Gains
Both Bridgerton and Baby Reindeer were among 107 Emmy nominations landed by Netflix helping deliver solid subscriber gains worldwide in Q2 over 8 million, bringing its global base to 277.65 million. The company also reported a 17% rise in revenue to $9.56 billion and net income of $2.15 billion (versus $1.49 billion a year ago) beating its own forecasts and those of Wall Street.
“Netflix's Q2 results highlight its resilience and strategic prowess in maintaining market leadership, powered by captivating content and a robust subscriber base,” said Andrew Skerratt, Global Insights Director at Kantar. “Baby Reindeer, the most enjoyed VOD series in Q2 in the UK, and the latest season of Bridgerton have significantly boosted Netflix's subscriber engagement and retention.
Amid growing competition, Netflix continues to lead in content discovery too with 53% of British VOD subscribers turning to Netflix first to discover new content.
“These insights underscore Netflix's edge in content quality and user engagement, which are proving to be key factors in securing future growth,” Skerratt said.
New Subscription Drivers at Disney+, Prime, Apple+
Other pointers from the Kantar report indicated that the latest (20th) series 20 of Grey’s Anatomy was the top driver of new subscriptions to Disney+ over the quarter for British viewers with Japanese historical drama Shogun continuing to perform well.
For Amazon Prime Video it was the farming documentary fronted by Jeremy Clarkson which was responsible for attracting 14% of new Prime Video content-led subscriptions over the second quarter. Clarkson’s Farm was also the second most enjoyed title across the whole of the UK, behind Baby Reindeer.
AppleTV+'s share of new subscriptions fell back in the second quarter with specific title-driven acquisitions falling from 44% last quarter to 34% in Q2. What Kantar describes as “a slightly weaker slate” in the second quarter meant AppleTV+ relied more heavily on free trial promotions to drive subscriber growth.
Struggles at Paramount+
Over at Paramount+, the evergreen IP of Star Trek was the most watched show, beating out Yellowstone for the first time in a year as the franchise most important in attracting new subscribers, but it wasn’t enough to stop a fall in share.
“Paramount continues to struggle with subscriber advocacy, with Net Promoter Score (a measure of subscriber advocacy) remaining in negative figures for the last 12 months,” said Skerratt.
“This is limiting the ability of Paramount+ to win new subs via word-of-mouth recommendation, instead having to rely more heavily on expensive marketing campaigns.”
More than 1 in 3 of those quitting the service say they are not using it regularly enough and cite a lack of new content as a key reason.
Sport Leading the Pack for WBD
With Max yet to launch in the UK (until existing content contracts with Sky unwind), unsurprisingly it is sport which leads the pack for British subscribers to Warner Bros. Discovery services like TNT EuroSport and discovery+.
It climbed to third place in the second quarter in share of new paid-for subscriptions, with sports being a driving force for 1 in 4 new subscribers, the highest in over a year.
WBD might expect another bump in Q3 since it holds rights to the Olympics (shared with UK free to air broadcaster BBC), the Tour de France and US Open Tennis.
Skerratt remarked, “Prime Video’s resurgence, driven by popular content, highlights the crucial role of compelling shows in subscriber retention. Meanwhile, the consistent performance of Disney+ and Netflix demonstrates their ability to deliver engaging content that resonates with diverse audiences.”
Ads and Turn to Churn
Nonetheless, the cost of living is biting with households definitively cutting back on the number of services they pay for each month, likely jumping between streamers to catch up with the latest must-watch content having binged series on another service.
Per Kantar’s research 19.5m British homes hold at least one paid video streaming service in Q2 which is down 300k from the first quarter.
Q2 was also light on new subscriptions, with only 8% of the British population taking out a new VOD service, the lowest in 12 months.
In addition to which almost half of UK streamers (47%) would accept ads for a cheaper service, which is up from 42% at the start of the year.
Although Prime Video’s churn rate fell below that of Netflix (at just 2% this quarter) Kantar noted some lingering concerns for viewers of Prime Video’s ad-supported tier about the number of ads served. Dissatisfaction is at -17% compared to -6% for Netflix and -7% for Disney+.
That lower score for Disney+ seems to be playing a key role in attracting new subscribers to the streamer, notes Kantar. AppleTV+ does not have an ad-supported tier and fell to #4 spot with a 12% share after holding the top spot for the last six months, in Kantar’s table.
“The latest data from our Entertainment on Demand study highlights the importance of compelling content in retaining subscribers,” Skerratt concluded. “The strong performance of Disney+ and Netflix underscores their ability to consistently deliver engaging shows that resonate with diverse audiences. Understanding these trends and consumer preferences is crucial for streaming services aiming to maintain and grow their subscriber base in a highly competitive market.”
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