Streaming platforms: inflation and competition changing the picture

Author Moonshot.news

Published on: 20/04/2022

The streaming video market is confusing. Market leader Netflix reports big loss of subscribers in the first quarter of 2022. In the UK 1.5 million subscriptions were cancelled with customers saying they want to save money because of increased inflation and household costs. At the same time, a survey from measurement firm Nielsen said streaming services consumption is expected to grow with 93% of Americans saying they will increase or change their subscription plans during the year.

The number of Netflix subscribers has fallen for the first time in a decade. The market reacted and shares fell 23%. The decline is an indicator of the stiff competition on the streaming entertainment market but also of that the boom experienced during the pandemic is fading. A UK study shows that also the global inflation will be a problem for the streaming market with subscribers cancelling subscripts as household costs are increasing faster than in many years.

COMPETITION

The trend has been that viewers are leaving the tradition television in favour of streaming video in general. Netflix is biggest on the market with more than 220 million subscribers globally but the competition in increasing by for instance Disney+, Apple TV, YouTube etc. Most recently also news company CNN has entered the streaming subscription market with its CNN+

Netflix reported that it has lost 200 000 subscribers in the first quarter of 2022 after having increased prices on main markets like the US and UK. The company is also one of the many that have been pulling out of the big Russian market as a result of the country´s attack on Ukraine.

Presenting the first quarter report, the company blamed increasing competition and that people share passwords for the falling number of subscribers. The company estimates that more than 100 million household are creating  by sharing passwords.

ADVERTISING

The firm’s revenue in the first three months of the year was up 9.8% compared with the same period last year to more than USD 7.8 billion .

Netflix said it is aiming at international markets to increase subscribers and compensate for problems with password sharing.

The company has so far been negative to advertising but in a tougher climate this attitude could change and CEO Reed Hastings said “it’s pretty clear” that ad-supported services are working for competing streaming services.

“Those who have followed Netflix know that I’ve been against the complexity of advertising, and a big fan of the simplicity of subscription. But, as much as I’m a fan of that, I’m a bigger fan of consumer choice.”

Such a choice could be advertising to cut subscription fees. A study in the UK recently showed the problem with only relaying on households paying for subscriptions in a time with increasing inflation and thereby household costs. Market research company said UK households have cancelled more than 1.5 million streaming subscriptions in the first quarter of 2022. 38% of them said they wanted to save money.

OVERWHELMED

Market surveys have shown that the increasing competition on the market is also frustrating for the consumers.

Measurement firm Nielsen said a study shows consumers are overwhelmed by choice. 46% of the US audience said they feel overwhelmed by the growing number of services and platforms that has made it difficult to find the content they are looking for.

Overall, Americans increased their average weekly time streaming video by 18%, with a year-over-year increase from 143.2 billion streamed minutes to 169.4 billion between February 2021 and February 2022.

Two takeaways from the Nielsen study

• Streaming service consumption is expected to grow, with 93% of Americans reporting they will increase their paid streaming services or make no changes to their existing plans over the next year, and over the last three years there was an 18% increase in all available video content.
• Due to a nearly 20% increase in unique program titles over the past three years, nearly half of audiences (46%) feel overwhelmed by the growing number of services and platforms that makes it more difficult to find the content they’re looking for.

GROWTH

“Consumers want access simplified and the explosion of services has renewed discussions around bundling and aggregation. Ultimately, these challenges signal an opportunity as the industry harnesses streaming for long-term business growth”, says Brian Fuhrer, SVP, Product Strategy, Nielsen.

The focus on streaming television trend has over the last years has been clear in the US. Cable TV was  earlier the dominating platform. 9 in 10 households used to have it but that is now down to  just around half of them.