The U.S. streaming industry has reached the point of near saturation, with 123 million U.S. homes (95% of all homes) having at least one streaming VOD service in December of 2023, according to Kantar.
Kantar’s latest Entertainment on Demand (EoD) data on the US streaming market provides additional evidence that video streaming is at a near total market saturation level and that players will have to focus on sub retention, providing customers more value, FAST channels and international expansion for further growth.
The report also noted that over half of US households now use a FAST service in the average week, as FAST continues to be the fastest growing streaming type. Yet, growth of both FAST and AVOD slowed in Q4, despite the Cyber Monday deals for various AVOD streaming services offered in November, Kantar reported.
The Kantar data also showed that Apple TV+, ESPN+, and Prime Video saw the greatest absolute growth in subscriber share over the quarter among paid VOD competitors, aided by promotions, trials, and holiday spending.
Other key findings include:
- Perception of content improved in Q4 as the writers’ and actors’ strikes came to an end. New content and content variety drove a greater share of sign ups in Q4 compared to Q3.
- Yellowstone on Peacock was the most watched SVOD title in Q4’23, followed by Netflix’s Virgin River, and Loki on Disney+.
- The #1 go-to streaming service for content discovery continues to be Netflix, but Hulu and Max gained share as the #3 and #4 spots, respectively, in Q4.
- Value for money is seen as the most important factor driving sign up to new video streaming, for the first time surpassing specific content as the most important factor.
In the new study, the researchers stressed that noted that with near total market saturation, streaming services are finding it harder to win new users and that the major players are increasingly looking for ways to add value to their offering in order to retain their subscriber base and prevent churn.
This means that streaming services can no longer compete on only the newest title releases, the researchers argued. They must also provide additional value to keep users engaged.
One obvious way to provide value is price. While this option has had limited value in the wake of recent price hikes, Kantar noted that streamers are also looking to password sharing and the ability to create multiple profiles as a way to create value. The ability for multiple household members to have their own profile drove a greater share of new, paid subscription in Q4 than in Q3 2023, up 13% in the quarter, Kantar reported.
Diversifying content is another way to provide additional value, the researchers said. Increasingly services like Prime Video, Peacock, and Max are offering live content such as news and sports. Streamers have become more satisfied with both sports and live news offerings over the last six months, while at the same time become less satisfied with the variety of original content and TV series. Sports helped drive the growth of both Prime Video and ESPN+, who saw the largest jump in paid streaming market share in Q4 2023, the researchers said.
With the Olympics in 2024, Kantar said that the market is likely to continue to see an increased interest in sports in the coming year.
Another way to provide value is via brand ecosystems or bundles of services. The ability to subscribe to another service as a channel add-on provides the convenience of saving the time it takes to switch between services, the researchers said.
Channel add-ons, such as Paramount+ on Apple TV+ or Max on Prime Video, now account for 23% of all streaming services, up from 20% in Q3 2023. Apple TV+ has benefitted from this growth. The share of video streaming services accessed as a channel on Apple TV+ has risen 45% in the last 6 months, Kantar said.
Brand ecosystems also go beyond streaming channels, the researchers explained. Prime Video benefitted from Prime Shipping in the Amazon ecosystem in Q4 2023 with Prime Day in October, Cyber Monday in November, and holiday shopping in December. Apple TV+ benefitted from iPhone sales in the Apple ecosystem in Q4’23.
There is also evidence that linking a streaming service to a wider ecosystem is beneficial to the streaming service’s brand health, the study found.
When asked to rank their streaming subscriptions from the most to least important, the proportion of Prime Video and Apple TV+ subscribers who ranked each service as their #1 most important subscription in their streaming repertoire grew to their highest recorded levels in Q4 2023. One in three Prime Video subscribers say Prime Video is their #1 most important service, and one in four Apple TV+ subscribers rank Apple TV+ as their most important service, Kantar reported.
