The U.S. premium SVOD market continued its unstoppable growth in Q1 2021:
- Total subscriptions were up 24% year-over-year (YoY).
- And +64% since 1Q 2019!
However, according to Antenna researcher Jonathan Carson, “the category has experienced a staggering amount of disruption in the 18 months since Disney+’s launch.”
Netflix losing dominance
- Two years ago, Netflix and Hulu accounted for over 3 out of every 4 Premium SVOD Subscriptions.
- But in the past two years, they have grown just 8%, and so now account for 1 out of 2 Subscriptions.
- Why: The rainbow of new colors in the chart below captures the impact of the arrival of competitive new streaming services.
Other services take off
- The four other Premium SVOD services that were in-market two years ago — HBO Now (now HBO Max), Showtime, Starz and CBS All Access (now Paramount+) — still make up about 1 of 4 Premium SVOD Subscriptions.
- But to maintain that share level in the face of new competition, they have grown 100% in the past two years, and so now operate at much more substantial scale.
New Services: Disney+ Leads
- A major change has been the new services that have launched.
- Disney+, Discovery+, Peacock, and Apple TV+ now account for 22% of all Subscriptions.
- Disney+ alone has accounted for 44% of all category growth since Q1 2019.
Clearly the launch of Disney+ in November, 2019 was the biggest catalyst to fragmentation, as its growth has been meteoric, with over 100 million subscribers globally as of early March, with an estimated 40 million of those in the U.S. alone. But other high-profile launches in the past two years including HBO Max, Peacock, discovery+ and the rebrand of CBS All Access to Paramount+, have all impacted fragmentation as well. VideoNuze
- Antenna’s Jonathan Carson reports that there is more churn as subscribers cancel services.
- Netflix enjoys the lowest churn rate, staying roughly flat, moving from 2.3% to 2.4%.
Rise of AVOD
- The rapid growth of advertiser-supported streaming services like YouTube, The Roku Channel, Tubi and Pluto foreshadows more change ahead.
- These AVOD platforms are also commissioning originals, including unscripted.
- Antenna didn’t report Amazon Prime Video numbers.
- Amazon said in its Q1 ’21 earnings report that 175 million Prime members have streamed TV shows and movies in the past year.
- It didn’t provide any breakdown of U.S. share vs. rest of world.
What You Need To Know: Peter’s ‘Buffet’ Theory
- You’re not alone in getting a headache sorting through the acronyms for new streaming business models, much less understanding how to reach the platforms like Tubi that populate them.
- The shift from channels to streamers is accelerating, and that means new buyers for unscripted programs.
- As I’ve written here, the total scale of the documentary / unscripted pipeline is shrinking: unlike the channels, the streamers don’t need to commission 300-600 new programs each year to fill their 7-day schedules.
- However, the streamers need to be competitive by offering a satisfying buffet of programs, or they will lose subscribers to churn.
- I expect the streamers like Netflix and Disney+ to broaden their originals strategy beyond their recent focus on BIG, celebrity-connected, award-winning documentaries and series.
- To continue the ‘buffet’ metaphor: subscribers won’t be satisfied with a handful of programs that are like Michelin 3-star appetizers when then consider retaining a service.
- The pressure will be on for the platforms to either specialize like Discovery+, or to cover multiple genres with a rich buffet of programs.