Streaming services growth slows as 'subscription fatigue' spreads
Amid what appears to be a continuing increase in so-called ‘subscription fatigue’, growth in streaming services overall has been slowing down significantly in recent years.
In a new survey from global consulting firm Simon-Kucher, only around 36% of respondents in Australia said that they are using streaming services more this year as compared with last year. That is down 13% points as compared with the same survey twelve months ago.
Around 45% of Australian respondents said they would cancel a subscription they have now and trade it for a new one, with only 32% saying they would not cancel any subscription. The average number of subscriptions per respondent has decreased by about 10% compared to last year.
“While streaming was on the rise over recent years, we are now seeing some evidence of saturation in the market – a broad variety of providers are fighting for the time and budgets of consumers,” said Lisa Jaeger, Partner and Global Head of Technology, Media & Telco at Simon-Kucher.
“As consumers are becoming more and more price sensitive, cancellations will also become more likely unless service providers are able to meet consumer expectations and prove the value of their product.”
The study found that the gap between free streaming services and paid subscription services is beginning to close. 33% of total streaming time was spent on free online services – that is up by eight percentage points when compared with last year. Paid subscription services, on the other hand, make up 49%.
“While streaming was on the rise in recent years, we are now seeing some evidence of saturation in the market – a broad variety of providers are fighting for the time and budgets of consumers,” said Jaeger.
“As consumers are becoming more and more price sensitive, cancellations will also become more likely unless service providers are able to meet consumer expectations and prove the value of their product.”
Netflix, considered the best performer in the sector, lost about 1 million subscribers in the first half of 2022. Though much of that loss was reversed in the past year, it still points towards difficulties for streaming services: Fierce competition among the myriad services available and unwillingness from users to pay more.
Streaming services are mostly not profitable. As the clear leader in the industry, Netflix is the exception, though he company has been struggling to stay afloat. Many of the cheaper rival streaming services snatching users from Netflix – think Disney+, Hulu, HBO, and others – have been running at a loss, hoping to challenge Netflix’s dominance and cash in on the streaming boom in the long term.
Despite the difficulties in the industry, streaming is not going away – the sector is expected to grow by 46% in the next five years, according to one analyst firm. But in order to stay in the game, streaming providers will need to assess their business models, and will likely need to transform their offerings to beat out the competition.
