A new Bank of America report reveals a growth slump in the video streaming industry. Downloads and monthly active users (MAU) across major streaming platforms like Netflix, Paramount, and Walt Disney collectively declined by 4% in April.
Behind the slowdown:
Analysts attribute the slowdown to a confluence of factors. The streaming market, particularly in the US, might be nearing saturation after a pandemic-driven surge in subscriptions. With a plethora of services vying for viewers’ attention, some users may be reaching a point of subscription fatigue, feeling overwhelmed by the number of platforms they pay for and the content they can’t keep up with. Additionally, viewers may be growing increasingly cost-conscious in a shaky economic climate, prompting them to re-evaluate their entertainment spending and cut back on non-essential subscriptions.
User engagement across platforms:
- Netflix, the long-time king of streaming, witnessed a 6% decrease in downloads and an 8% decline in MAU. This could be a sign that the company is struggling to retain subscribers as competition intensifies and viewers become more selective about their streaming choices.
- Disney also experienced a drop in user engagement, with downloads falling by 26% and MAU by 10%. This could be due to a lack of new content that resonates with a broad audience, or viewers may be growing frustrated with the platform’s separation of content across Disney+, Disney+, and Hulu.
- Warner Bros Discovery, however, emerged as a bright spot, recording growth both year-over-year and month-over-month. They reached 11.8 million downloads and boasted 48.6 million MAUs. This positive trend could be attributed to the recent merger between Warner Bros. and Discovery, which has expanded the company’s content library and potentially attracted new viewers interested in the combined offerings.
The road ahead for streaming services:
To combat this slowdown, media companies are devising new strategies. These include:
- International market expansion: Streaming services are increasingly looking to overseas markets with untapped potential for subscriber growth. By investing in local content production and tailoring their offerings to regional preferences, they hope to attract new viewers and reignite growth.
- Investments in sports streaming rights: Live sports are a major draw for many viewers, and streaming services are recognizing this by investing heavily in sports streaming rights. This strategy not only attracts sports fans but also gives platforms a unique selling proposition that differentiates them from competitors.
- Subscription price hikes: To offset declining user numbers and generate additional revenue, some streaming services are resorting to raising subscription prices. However, this approach can be a gamble, as it may lead to further subscriber churn if viewers feel the price increase is not justified by the value proposition.
- The report also sheds light on the growing adoption of ad-supported tiers and stricter password-sharing restrictions, both employed by streaming services in their fight for dominance within a fiercely competitive landscape. As the market matures, these strategies may become increasingly common as platforms seek to optimize their revenue models and attract new audiences.
