Simon-Kucher’s 2024 Global Streaming Study revealed that streaming services faced unprecedented demand for unique content opportunities and the Australian streaming market remained strong. David Boer, senior manager at Simon-Kucher, gave expert insights into the findings.
Significant shifts were visible in subscription dynamics and content preferences.
“Streaming is at a fascinating crossroads,” said Chris Petzoldt, managing director, Simon-Kucher Oceania. “The number of subscriptions per person increased by 22 per cent in Australia but budgets declined. While there’s still an appetite for streaming services, a significant share of subscribers feel that they spend too much on streaming and that they have too many streaming subscriptions. Despite slower growth, the increase in paid subscriptions and demand for unique content creates a real opportunity for providers to innovate and differentiate themselves”.
“The streaming landscape is continuously evolving, and content remains the primary differentiator,” added Petzoldt. “Providers must strategically adapt to these trends. They need robust content offerings capitalising on new commercial levers to stay competitive and cater to shifting consumer preferences”.
Key Findings
Growth Trends:
The Australian streaming market is still expanding but at a slower pace. Five percentage points fewer users are increasing their streaming consumption compared to last year’s study. Paid subscriptions now account for 62 per cent of streaming time. This is up by 13 percentage points from last year. The use of free online services has decreased by seven percentage points. In Australia, 39 per cent of subscribers plan to cancel at least one subscription in the next 12 months. More than half of respondents who intend to churn gave a content-related reason.
“Looking at the trends, we expect three things: to remain competitive, streaming companies will need to put continuous emphasis on developing their content library, with content being the key purchase driven. To prevent churn, we expect a widespread launch of ad-supported plans, as we see close to 39 per cent of consumers are likely to cancel a subscription within the next 12 months, of which more than half (53 per cent) can be convinced to stay through a cheaper plan with personalised ads. We expect more differentiation across subscription plans,” said Boer.
“The challenge for streaming companies will be preventing churn while simultaneously preventing large groups of consumers from downgrading to the cheaper plans. Additional differentiation (e.g., based on functionality such as video quality or on content access) and ‘fencing’ (e.g. limiting the amount of screens) across subscription plans will allow them to balance that,” he added.
Social Media Impact:
31 per cent of Australian respondents replace potential streaming time with social media. This rises to 44 per cent among 18 – 39-year-olds. When it comes to the appeal of social media, short-form content is streaming’s biggest competitor — 38 per cent of respondents say they find it as entertaining as streaming series or movies.
Subscription Dynamics:
The average number of streaming subscriptions per person in Australia rose from 2.5 to 3.1. Part of this rise is likely the result of password-sharing restrictions implemented by major players like Netflix.
‘Subscription fatigue’ is significant, as 39 per cent of Australian subscribers feel that they have too many subscriptions. In line with US, Mexican, Swedish, and Singaporean streamers, respondents from Australia are particularly vocal about how they spend too much money on too many streaming providers.
“We believe subscription fatigue is mainly related to spend, rather than overstimulation. For example, we see that the average number of streaming subscriptions still has grown significantly in Australia, by 22 per cent vs. last year. However, we also see that social media platforms, with highly personalised content, are directly competing with streaming services. 31 per cent of Australian consumers are replacing streaming time with social media content. That is even higher (44 per cent) across younger Australians (18-39 year olds),” said Boer.
Market Differentiation:
Broad content selection remains the most important value driver.
Most Australian streaming providers are perceived similarly in value and price, with only Foxtel Now being perceived as overpriced. Content can provide a competitive edge and serve as a primary differentiator for providers.
“We see that the breadth of content is by far the main purchase driver for Australian consumers, much more important than functional differentiation, such as high video quality or the streaming app experience. Expanding content provides an immediate opportunity for streaming services to increase sign-ups, as we see that 56 per cent of Australian streamers have paid to access a stream service just to watch a particular piece of content. This is a 4 per cent-point increase compared to last year, indicating it is turning more and more into a content game,” explained Boer.
“It is important for streaming companies to determine which consumers they are seeking to address, and how that translates into content innovations”.
“Our insights show for example that Australians are less interested in getting live content through streaming services compared to the global average, putting more emphasis on films and TV series. We also found that almost a quarter (23 per cent) of Australian consumers would be interested in seeing games included as part of the subscription, which could present an interesting niche for streaming providers,” added Boer.
Commercial Levers:
There has been significant growth in the number of subscribers on ad-supported packages, and there is scope to optimise how advertising is served to subscribers on these packages. Additionally, ad-supported packages remain an effective lever to prevent churn of price-sensitive subscribers, even more so when advertisements are personalised.
Adding gaming to streaming packages would be attractive to certain streamer segments, with 23 per cent of subscribers stating they would be more inclined to sign up for a streaming service subscription if games were included.
