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Research: SVOD is facing a churn issue

Despite Netflix increasing its paying subscribers by 10% on the back of stricter enforcement of password sharing rules last year, and it holding almost 8000 pieces of content, research suggests that churn remains a problem due to content fatigue.

According to the research from MTM’s ScreenThink, 60% of Netflix users reported experiencing content fatigue. This could explain why there was a 13% drop in people aged 16-34 years old looking to SVOD (subscription video-on-demand) services first when looking for something to watch compared to Q2 2022. Instead, young people are increasingly choosing live TV or BVOD (broadcast video-on-demand).

A further consideration for SVOD platforms is the fact that 12.5% of viewers feel comfortable subscribing and unsubscribing from SVOD services, depending on the content available to them at a given time.

This is proving to be a challenge for Apple TV+. The service has a reputation for high-quality but, with fewer than 500 titles, subscription cycling is quite common. The research found that 26% of users and lapsed users had subscription-cycled Apple TV+ in the last six months, and 34% of current users are very likely to cancel their subscriptions in the next six months. On the other hand, 8% of viewers intend to sign-up to Apple TV+ in the next six months.

“ScreenThink’s research unveils a pivotal moment for the SVOD industry. While established players like Netflix can find success through stricter account management, with viewers increasingly cost-conscious and open to alternatives, platforms need to demonstrate clear value beyond simply offering a large content library. Focus on user experience, content curation, and innovative pricing models will be crucial for success,” said Philippe Epailly, Head of Quant and MTM ScreenThink.

“The introduction of ad-supported tiers by Disney+ and the recent launch by Prime Video represents a potential solution for cost-conscious viewers. The initial success of Disney+’s premium tier also indicates viewers are willing to pay for an ad-free experience. However, striking the right balance between ad load and user experience will be crucial.”