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Domestic SVOD Adoption Slowing

8 Dec, 2016 By: Erik Gruenwedel


45% of first-time SVOD subs plan to cancel within six months


Netflix, Amazon Prime Video and Hulu control the subscription-streaming video market in the United States — to the point of saturation. As a result, the percentage of new domestic SVOD subscribers is declining, according to new data from Paywizard, a London-based provider of backend support for digital distributors.

In a survey, the company found that 26% of U.S. consumers plan to subscribe to a new SVOD service prior to Christmas this year — down from 31% last year. Indeed, The United States was the only territory with a downward projection for new SVOD subs, with the United Kingdom (25%), Australia (23%), Brazil (50%), and Singapore (32%) up from 2015. Germany was flat at 24%.

The research, which took place in November and is based on an online survey of 6,242 respondents across the aforementioned markets, would appear consistent with Netflix’s waning domestic sub growth.

The SVOD pioneer added 530,000 combined subs over the past two fiscal periods — down significantly from projections of 2.8 million.
Paywizard found younger respondents globally more likely to sign up for SVOD, with those under 35 years of age nearly three times more likely to subscribe before Christmas than the 55-plus age group. Among the latter demo, 59% said they have no plans to subscribe to SVOD this Christmas, which is down from 70% last year.

Regardless, with 18% of respondents across all surveyed territories indicating a desire to acquire a new SVOD service this year, when combined with 45% SVOD combined subs, market penetration could top 63% — albeit not for long.

That’s because the research across the territories found 50% of those taking a service for the first time this Christmas intend to cancel their subscription within six months. In the U.S., women planning to take new subscriptions this Christmas are far more likely to cancel their subscriptions than men (50% versus 40%). These percentages are higher in Germany (54%), the U.K. (56%), Australia (59%) and Singapore (66%).

Perceived value (70%) topped factors why a domestic SVOD sub would cancel service, followed by paucity of content (44%) underscoring importance of recommendation analytics, and poor viewing experience (32%), including buffering or dropped service.

“The 2016 survey reinforces our understanding that OTT, with its high growth rate, also risks high churn — calculated at this year at four times that of leading satellite and cable operators,” read the report.

 


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