Bundling, discounts the new battlegrounds for US SVOD
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| 21 December 2022
As cost-of-living pressures continue to bite in the US, pricing and bundling will be key to retention of subscription video-on-demand (SVOD) customers says a study from Ampere Analysis.
Ampere Disney and Hulu 21Dec2022
The study noted that while newer SVOD players were continuing to see strong gross additions to their subscriber base, the increasingly saturated SVOD market presents growing challenges for established services to maintain success. Moreover, it stressed that as US consumers edge closer to a ceiling for service stacking, attracting new subscribers and mitigating churn has become more important than ever. In total, US SVOD homes were found to have on average access to 4.5 services.

As they rely more heavily on individual title launches, newer platforms (including Disney+) were found to have higher levels of both sign-up and churn, while established SVOD platforms’ sign-up and churn rates were much more affected by pricing changes. For all SVOD platforms, leavers were primarily in younger, lower-income demographics, more sensitive to pricing and content offering. The analyst noted that discounted ad-supported tiers will mitigate churn here.

Ampere noted that other option to address price sensitivity was bundling. It observed that Hulu’s US sign-up and cancellation rates now mimic those of sister service Disney+, as its users increasingly purchase their subscription through the bundle. Almost a third (32%) of Hulu subscribers have bundled with Disney+ which uses franchise title releases and its first live broadcast to drive sign-ups.

“The increasingly competitive SVOD market makes it hard for established services to maintain growth, while newer players continue to see strong gross additions but struggle to retain those customers,” said Ampere Analysis analyst Mayssa Jamil. “Pricing and content offering being the main drivers for sign-up and churn, a great way to aid customer retention is through bundling: it combines both of the above by offering larger catalogues and more frequent content additions at cheaper prices. We see this at play when looking at the way Hulu and Disney+ sign up and churn rates increasingly mimic one another thanks to the strength of the Disney Bundle.”