The story so far: How SVoD providers have been navigating churn in 2023
Unsurprisingly, global video entertainment has already seen a wealth of change in 2023. As certain markets near saturation point, subscription services are adopting various strategies to retain viewers and combat churn. With a flurry of external factors continuing to guide consumer behaviour, innovation and evolution have become prerequisites for these global brands.
A generous handful of headline-worthy developments have already unfolded in the relatively short period since Futuresource’s last Living with Digital survey. The impact of ad-tiers, Netflix introducing yet another revenue-driving feature, and the inflating cost-of-living – a mixed bag of factors – are continuing to shape the entertainment landscape. Head of Entertainment and Principal Analyst James Duvall discusses these latest developments.
Password sharing crackdown bears mixed results
In a bid to increase revenues within markets nearing saturation point, Netflix has begun to crack down on password sharing. The popular consumer hack involves members sharing their account passwords with family and friends outside their households. To combat this, Netflix has introduced a feature allowing members to add an external member for a fee.
“The motive behind Netflix’s latest move is clear: bump up revenues as competition stiffens. But it’s bearing mixed results so far. Naturally, a lot of people aren’t happy. Consumers on tighter budgets may opt to forgo access to content rather than pay for a membership, which is what we’ve been seeing in Latin American markets. In the US, the move has been largely positive,” says Duvall.
“We’re currently researching for our upcoming consumer survey Living with Digital, where we’ll determine whether this new feature is drawing in paying subscribers or pushing viewers out.”
Impact of Disney ad-tiers begins to emerge
Cracking down on password sharing hasn’t been the SVoD giant’s only move in pursuit of higher revenues. At the end of last year, Netflix began to roll out ad-supported membership plans, offering a cheaper alternative to subscribers to help combat churn. Shortly after, Disney declared the support of more than one hundred advertisers, offering consumers in the US ad-supported entertainment starting at $7.99. While some of Netflix’s films and shows are blocked from members on lower ad-tiers, Disney’s subscribers retain access to the full catalogue of content.
“The introduction of ad-tiers from two of the biggest brands in the sector has been one of the biggest structural changes to SVoD services in recent history,” says Duvall, “and now, the full scale of the impact in the US is beginning to become clear.
Surprise new branding for HBO Max
Ad-tiers, password crackdown, and a brand overhaul for HBO Max – it’s been a busy year for SVoD providers. In a move that saw some initial shock from some branding experts, Warner Bros. Discovery rebranded ‘HBO Max’ to simply ‘MAX’, losing the long-standing recognisable element of its trademark name. The move is designed to help “broaden the appeal of the service from mostly adults out to kids and family audiences.” Made public in the States in May, the rebrand is expected to launch in Latin America later this year, and Europe in early 2024.
“This could indeed help the business diversify and cast its net to a wider audience. But in another scenario, the rebrand could harm consumer awareness, creating confusion among viewers about where to access beloved ‘HBO’ shows,” says Duvall.
Warner Bros. Discovery recently stated that, within the first week, 70% of HBO Max customers made the switch to the new MAX platform.
Cost-of-living continues to bite
“Lurking in the background is, of course, the ongoing issue of the cost of living,” says Duvall. “Some markets are suffering more than others. Of all the countries Futuresource is surveying, OECD’s latest report shows that the is UK likely to have the worst inflation for 2023. The economic turmoil won’t last forever – in 2024, the UK is expected to bounce back and overtake the likes of France, Italy, Brazil and Australia. But the current financial circumstances are certainly influencing consumer behaviour.”
Churn is a big consequence of tightening budgets, with consumers cutting down the number of subscriptions they have and hopping from one platform to the next based on content and cost.
Impacts on the wider entertainment landscape
It’s a competitive landscape, with most services having a strong representation across global markets. “This is levelling the playing field, allowing us to better compare and contrast services. In our upcoming survey, we’ll dive into the topics discussed here and many more,” says Duvall.
For more information about our upcoming Living with Digital survey, contact Leon at leon.morris@futuresource-hq.com.
About the author
Olivia Lowden is responsible for the long-form content, press, and partnerships at Futuresource. Prior to her career at Futuresource, she completed an MA in Creative Writing at the University of East Anglia, demonstrative of her lifelong love of words.
About the author
James Duvall joined Futuresource as the Principal Analyst for Entertainment in November 2022. He is responsible for the delivery of all consumer research and projects across Home Entertainment, covering over twenty regions for Futuresource’s Video Insight reports, the bi-annual Living with Digital survey, and the bi-annual Music Streaming report. Before Futuresource, James spent six years leading the insight and research programme at the British Association of Screen Entertainment and the Digital Entertainment Group International (DEGI), building upon his wealth of experience within insight teams for US Studios.
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