Global streaming wars: The world is churning

Streaming services in Australia are about to feel the churn.

Deloitte predicts that in 2022, at least 150 million Streaming Video-On-Demand Services (SVOD) subscriptions will be cancelled globally with churn rates of 30% for each market.

The competition in the streaming market is intensifying as leading providers expand around the world, while national media companies launch proprietary streaming services in home markets, for example, Stan in Australian by Nine Entertainment Co.

Subscriptions have become overwhelming to many, and consumers have become more aware of the associated costs.

Customers are increasingly likely to cancel their subscriptions or turn to less expensive ads-based options to either manage costs or to pay only for the content they want by adding and cancelling services as necessary.

Last year, the NPD Group found that 21% of subscribers had decreased their engagement with SVOD services or had cancelled them due to more appealing content from other video services.

The rising popularity of advertising-supported video on demand (AVOD), which is usually free, has also contributed to SVOD churn.

But Deloitte says overall, more subscriptions will be added than cancelled in 2022, the average number of subscriptions per person will rise, and, in markets with the highest churn, many of those cancelling may re-subscribe to a service that they had previously left.

“The pandemic increased the need to maintain connections, improve productivity and experience entertainment, with accelerated adoption from both consumers and businesses alike,” said Kevin Westcott, vice chair, Deloitte LLP, U.S. TMT and global Telecommunications, Media and Entertainment (TME) practice leader.

A recent study from Telsyte reported Australians are switching on to SVOD at an increasing rate. In June 2021, 42 million Australians had subscribed to SVOD, up from 37 million in June 2020.

SVOD, streaming music, and video games subscriptions all experienced solid growth year-over-year (16%, 13%, and 13%), due to high consumption of home entertainment and a rising acceptance of subscription models.

In June 2021, 78% of Australian households had at least one entertainment subscription, up from 65% three years earlier. Households now subscribe to an average of 4.3 entertainment services (up from 2.7 in June 2018), mainly SVOD.

Games subscriptions are expected to grow rapidly, catching up to music and SVOD in the coming years, with entertainment subscriptions expected to surpass 60 million by 2025.

Netflix has over 6 million subscribers according to Telsyte’s 2021 Australian Entertainment Subscription Study, while Amazon Prime Video has 2.9 million, putting it just ahead of Disney+, which has 2.6 million.

These are all signs of a competitive and maturing SVOD market.

As SVOD matures, growth across global regions that may have different cost sensitivities will likely require different business model innovation and pathways to profitability.

Last year saw Australia become one of the “most competitive” SVOD markets in the Asia Pacific region, PwC found. The “talkability” and “social currency” of many SVOD shows were key drivers in changing people’s viewing routines, during a year in which the biggest screen in the house was “no longer the exclusive domain of linear TV”.

SVOD revenues will grow at a 20.4% CAGR through to 2025, with the industry set to be worth US$81.3 billion globally and A$3.3 billion in Australia. Netflix, Amazon Prime and Stan expanded their respective offerings in the market, while Binge and BritBox launched in Australia.

Established Australian box-subscription service, Foxtel, continued to experience a decline. It lost 267,000 cable customers in 2020, but with rising customers on its sport offering Kayo (624,000 paid subscribers) and entertainment platform Binge (431,000 paid subscribers), Foxtel managed a 12% total growth in subscriber numbers.

PwC also noted the increased competition between sports streaming services, with football in particular now split across Stan Sport, Optus Sport, Ten/Paramount+ and Foxtel/Kayo, predicting that the battleground will continue into 2022.

Deloitte SVOD bottom line

Other key findings from the Deloitte report

Wi-Fi 6 to outsell 5G devices

Deloitte predicts that more Wi-Fi 6 devices will ship in 2022 than 5G devices, to the tune of at least 2.5 billion Wi-Fi 6 devices versus roughly 1.5 billion 5G devices.

Data management and AI

Deloitte predicts some jurisdictions may be inclined to ban entire subfields of artificial intelligence, such as facial recognition in public spaces, social scoring, and subliminal techniques.

Furthermore, as a result of the increasing need to secure data used in AI applications, emerging technologies such as homomorphic encryption (HE) and federated learning (FL) will also expand rapidly.

Sports NFTs kicking goals

Approximately double the amount will be generated by Non-Fungible Tokens (NFTs) of sports media by 2022, Deloitte predicts.

A new NFT sports collectible will have been purchased or gifted to 4 to 5 million fans worldwide by the end of 2022.

Wearable wellness technology locks on

In 2022, Deloitte predicts that 320 million consumer health and wearable wellness devices will be shipped worldwide, and by 2024, that number will climb to 440 million.

Global spending on mobile mental health applications will reach close to US$500 million by 2022 as more attention is paid to mental health.


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