The switch to advertising supported content streaming is accelerating in Australia as subscribers look to save money.
Data compiled by Kantar shows 16.6% of video on demand subscribers have chosen a cheaper ad-supported plan, up from just 9.2% a year ago.
In June, Paramount+ will be the latest to roll out ads in Australia, with the basic (with ads) plan available for $6.99.
Media agencies are increasing their use of advertising on streaming platforms, seeing an opportunity to connect brands with premium content in a brand safe environment.
But Australians aren’t that happy as streaming platforms increase monthly fees, says Kantar.
Average household spend has risen for the third quarter in a row, now at $45 a month across an average of three services.
Kantar’s March quarter study shows overall satisfaction with value for money fell to 21% from 27% in the same three months last year.
Subscribers are also now more reluctant to recommend their service, with eight out of the top ten platforms suffering a year-on-year drop in Net Promoter Score (NPS).
The need to save money (42%) is the top reason for cancellation.
However, other value related cancellation reasons have seen a large increase, such as not being willing to pay a higher price and not wanting to pay after a free trial.
This has correlated with an increasing number of streamers cancelling their service, with most services experiencing a bump in churn rates in the first quarter of 2024
“This means services will need to diversify their offerings to make up for increased prices, for instance by increasing sports content, live streaming or locally produced content, all areas which have seen a slight uptick in satisfaction,” said Kantar.
“Meanwhile core areas that contribute to satisfaction, such as the quality of TV shows and amount of original content, have fallen back, particularly for global services like Disney+ and Netflix, no doubt a knock-on effect of the Hollywood writers’ strike last year.”
Subscriptions have been surging at Kayo, Foxtel’s sports platform.
Kayo, after launching a campaign in February ahead of the start of the new NRL and AFL footy seasons, and then boosted by the release of Foxtel’s aggregator platform Hubbl in March, enjoyed its highest ever share of new VoD subscribers (10%).
Those signing up primarily for AFL (24%) were ahead of NRL fans (18%).
Kayo retention rates rose to 88% from 84%, ahead of Stan Sport (77%) and Optus Sport (81%).
However, Binge suffered a drop in both new subscribers and retention, with the Black Friday $2 per month for three months offer ending in February/March, causing a hangover effect as churn increased by 2 percentage points to 20%.
Kantar now estimates 7.8 million Australian households subscribe to at least one service service, with penetration increasing to 75.2% from 74.3%
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