You’re familiar that the streaming service is currently in turmoil if you’ve been following Netflix recently. According to Antenna data, Netflix had 3.6 million membership cancellations in Q1 of 2022, more than one million more than in the Q1 and Q4 of 2021. It is a strong sign that Netflix is on the verge of losing its dominant position in the streaming market (Suggested Reading: Netflix Could Adopt New Growth Strategies to Recover Record Losses).
While Netflix’s demise has spurred speculations that the SVOD, subscription video on demand, the business has peaked and is declining, recent Antenna data contradicts this.
Premium SVOD subscriptions in the United States increased by +4.0% quarter over quarter and by +24.7% year on year. The research also suggests there were 37.4 million new gross SVOD subscribers and 29.8 million subscribers lost in the first quarter of 2022, leaving only 7.7 million new subscribers.
SVOD Numbers Pre and Post Pandemic
The 37.4 figure is similar to the previous two quarters but significantly higher than 2019. Peacock and Paramount+, two new services that added 6.1 million or more subscribers in the United States, were a big part of the growth.
Back in 2019, when Netflix and Hulu dominated the market, there were a cumulative 10.3 million subscriptions in its Q1. The significant increase indicates a three-year CAGR of 54%.
Although the subscriber growth is high right now, with new players, like Disney+, HBO Max, and Peacock in the market, so are cancellations. There were 30 million cancellations in the first quarter of this year, 12% higher than any quarter throughout history or 4.5x the cancel volume than in the past three years, found Antenna.
However, cancellations are not worrying considering the new subscription additions. If anything, it indicates that customers are bouncing around, known as churn and return.
Three services, Disney+, Paramount+, and Peacock, accounted for over 51% of all new subscriptions in the quarter. In addition, they also made up a huge portion of new subscriptions for the churned Netflix users in quarter one of 2022.
“Netflix’s subscriber loss in the first quarter this year, and its predicted declines in the following quarters, reflect a minuscule part of its global subscriber base,” said Peter Fondulas, principal at Hub.
“A service as extensively adopted as Netflix will eventually run out of room to expand. It would be a severe error, in our opinion, to interpret the Netflix experience as evidence that streaming TV services are on the decrease, as some analysts have suggested. The allure of exclusive content and the mere ease of on-demand viewing are two major factors that should keep these services booming for the foreseeable future.”
Volatility in the Streaming Market
Netflix announced a 200,000-subscriber loss in the first quarter of 2022, its first in more than a decade. Netflix’s subscriber count has dropped to 221.6 million from 221.8 million in the preceding quarter. Netflix’s losses are projected to continue, with the streaming service losing 2 million subscribers in Q2.
There has been a considerable rise in membership cancellations since Netflix raised rates on all plan levels in the United States in January 2022. After raising subscription fees, Netflix’s active monthly churn rate in the United States was over 2% in January 2019.
Furthermore, according to Antenna data, Netflix’s active monthly churn rate jumped +0.95 pts points month over month in January 2022, when a price rise resulted in an active monthly churn rate of 3%. Netflix’s active monthly churn rate was 3.3% by March. It indicates that Netflix’s planned lower-cost ad-supported tier is part of its strategy to reduce turnover.
This study shows the volatility in the streaming business. It’s difficult to forecast which service will take the lead next, but established streaming services like Netflix must stay vigilant and devise creative methods to lure new subscribers.