STREAMING WARS
It’s been a strange, and truly unique couple of years for streaming services. What started with Netflix’s breakthrough innovation--almost single-handedly creating a category and dominating the marketplace for a few years--has now evolved into an all-out battle royale for market share among an increasing array of streaming services. This ever-changing industry is of particular interest to the team at Lab42 - like many people, we love our streaming services and their shows. We first conducted research on the streaming industry in 2018 to get a baseline of people’s usage and perceptions of the available services, and we followed up with research earlier this year to determine how streamers’ habits have changed.
Not surprisingly, Netflix is still the dominant streaming service in 2021, as it was in 2018. However, with the launch of new video services, and increased popularity of existing services - Netflix’s market share actually decreased 15 points - from 89% of streamers to 74% of streamers - over the last 3 years. Hulu was the biggest gainer among existing services, with an increase from 28% in 2018 to 45% in 2021. Among new competitors, Disney+ already has a solid foothold with 34% of our respondents subscribing to this service.
As another blow to Netflix, they’ve lost a large percentage of exclusive subscribers - those who only subscribe to one streaming service. While in 2018 Netflix could boast 25% exclusive subscribers, that percentage fell 17 points to 8% in 2021. On average, streamers are now using nearly 3 (2.8) streaming services, compared to 2.5 in 2018.
In this world of free trials and freemium accounts, subscriber retention is a key data point to consider. Netflix still remains on top, with an 89% retention rate among its subscriber base (although this is down 4 points from 2018 when its retention rate was 93%). Hulu actually saw a 7 point increase from its 2018 retention rate of 64%, now up to 71% retention. We still do see lower retention rates with the newest streaming services, including Disney+ with a 53% retention rate and Peacock and HBOMax at 37%.
Will Netflix continue to be the giant in the room? According to consumers, yes, Netflix is likely to retain its market share in 2021, and will most other streaming services. A notable exception is HBOMax that is expected to grow slightly. That said, in a category as dynamic and as rapidly changing as streaming, customer wants and desires as well as category innovations and disruptions can force sudden, unforeseen changes to the landscape.
