Netflix satisfaction cools amid post-Christmas streaming cull
A decline in Netflix customer satisfaction has led to a surge in churn for the streaming giant amid a post-Christmas culling of UK video-on-demand services.
Kantar’s latest Entertainment on Demand data on the British streaming market found that Netflix suffered the largest absolute loss in subscriber numbers between January and March.
In total, the number of video streaming services being subscribed to by British households fell by 167,000 in the quarter to 29.4 million. Just 4% of British households took out at least one new streaming subscription in the first quarter of the year, up from 3% year-on-year, and 7% of households cancelled at least one subscription as part of their post-Christmas ‘subscription cull’.
While the launch of Netflix’s cheaper Basic With Adverts tier has helped it pick-up a small share of new subscribers, it saw increased cancellations overall as subscribers look for ways to save money as consumer finances remain tight, Kantar said.
Dominic Sunnebo, global insight director, Kantar, Worldpanel Division, said: “There has been no dramatic drop across most of Netflix’s key performance metrics, but rather, a gradual decline across almost all areas, including satisfaction with variety of TV series, amount of original content and quality of shows.”
During the first quarter of 2023, Netflix was responsible for three of the top-10 most-enjoyed video-on-demand titles in the UK, compared to six a year ago.
“[P]erhaps the most concerning area is that Netflix subscriber net satisfaction in value for money fell from +31% a hear ago to +22% in the first quarter of 2023,” Sunnebo added. “Netflix consumers are increasingly questioning the value for money they get from their subscriptions and when consumer finances remain tight, this is translating into increased churn.”
Clarkson and sport help Amazon improve post-Christmas subs slump
After the post-Christmas cull of subscriptions in Q1, the second quarter of the year looks to be more stable, Kantar added, with planned video cancellations dropping to 6.8% of subscription holders, a fall both year on year and quarter on quarter.
VOD-enabled households that subscribed to at least one video streaming service in Great Britain fell to 16.1 million (down 144000), quarter on quarter, representing 55% of households, compared to 16.9 million in Q1 2022 and 17 million in Q1 2021.
Notably, Amazon experienced a much smaller decline in its first-quarter decline in subcriptions than in previous years. Prime Video usually sees a surge in subscriber churn in Q1 due to a wave of Q4 sign-ups as customers temporarily buy Prime membership for pre-Christmas shopping online delivery.
Whilst Prime membership did drop back in Q1 2023, the drop was limited to just a 1%-point drop, significantly lower than seen during the same period a year ago. “Importantly engagement with Prime Video among loyal Prime Members actually increased in Q1…” Sunnebo added. “The release of Clarkson’s Farm during the quarter played a key role in engaging Prime Video subscribers, with the title the number-two most enjoyed across all SVoD platforms during Q1. Amazon’s investment in Sport also played an important role, with sporting content driving one out of every three new subscribers to Prime Video in the quarter.”
Strong first quarter for AppleTV+ and ITVX Premium
AppleTV+ had a strong first quarter to 2023, seeing the second fastest growth in absolute subscriber numbers vs. the previous quarter, only beaten by newly-launched ITVX premium, the ad-free version of ITV’s streaming successor ITV Hub. AppleTV+ took the number-four spot in terms of share of new subscribers over the quarter, with Slow Horses, an MI5 spy-based drama, a top title driving new subscriber acquisition.
“Apple’s challenge, however, is that it can’t produce new series fast enough for subscribers to feel like they’re getting sufficient value for money,” Sunnebo said. “While Apple scores top on quality on shows, it remained bottom on value for money, with the number-one reason for cancellation being ‘not enough new TV shows.”
ITVX recorded a jump in weekly users in Q1’23 vs ITVHub in Q4’22, Kantar said, along with ITVX premium gaining 5% of new SVoD subscribers in the quarter. A Spy Among Friends, the story of a MI6 agent and a Soviet Spy, helped to attract a new audience to ITVX premium, and was the top title driving new subscriber acquisition in the quarter.