'Bad Sisters'

Source: ABC Signature / Apple TV+

‘Bad Sisters’

The UK streaming video on demand (SVoD) sector generated an estimated £3.3bn in 2022, up 21.5% year on year, according to a report from UK media regulator Ofcom.

This comes as a consequence of price rises and overall growth in subscriptions.

Ad-supported tiers have also shown promise as a new source of revenue for streamers. Netflix launched its cut-price, ad-supported tier in November. “Netflix’s new ad-supported tier appears to have reasonably strong early appeal, with 13% of UK online adults and teens surveyed in February 2023 claiming to take it,” revealed Ofcom’s sixth annual Media Nations report.

This roll-out looks to be becoming more aggressive, with Netflix removing its cheapest ad-free tier in the UK in July 2023 (£4.99 a month).

Streamers’ investment in content has become more cautious, making space for greater profit. Content licensing has re-emerged as a revenue opportunity, and Netflix’s crackdown on password-sharing has been another means for the streamer to make money (11% of online adults and teens are non-paying users, according to Ofcom’s 2023 VoD survey of around 2,050 people aged over 13 years old).

However, it hasn’t all been positive for streamers in the UK. There was a slowing in the take-up of subscription video-on-demand (SVoD) services such as Netflix and Disney+, and there are indications that SVoD viewing declined in 2022. Two-thirds (66%) of UK households reported using an SVoD service in the first quarter (Q1) of 2023, down from a peak of 68% in Q1 2022.

Netflix remains the largest SVoD provider in the UK, with 59% of households
 subscribing. Disney+ (25%) added an additional 746,000 households between Q1 and Q4 of 2022, taking its subscription base up to 7.1 million households, but alongside Netflix and Amazon Prime Video, it fell in Q1 2023.

Apple TV+ increased its volume of subscriber homes by two percentage points compared to Q1 2022. Subscriptions to Apple TV+ are provided as a free trial with new Apple device purchases, which meant 18% of total Apple TV+ subscriptions were free in Q1 2023 (Q1 2022: 14%), compared with just 2% of Netflix and 3% of Amazon Prime Video subscriptions.

The average number of SVoD subscriptions per UK household (taking at least one SVoD service) remained stable between Q1 2022 and Q1 2023, at just over two per household, according to a Broadcasters’ Audience Research Board (BARB) survey.

YouTube and Facebook remain the largest social video platforms in the UK, each reaching 91% of UK internet users aged 15+ in the first quarter of 2023. Use of TikTok remains high among users aged 15-24, at an hour per day, but take-up among children has apparently slowed.

The report also revealed the hit taken by Broadcast TV. Weekly reach fell from 83% in 2021 to 79% in 2022, the biggest-ever annual drop. The long-term decline in viewing of broadcast TV also continued – it fell by 12% year on year and was 16% lower than pre-pandemic levels. For the first time, there is evidence of a significant decline in broadcast TV viewing among older (over 64) audiences. Older viewers are increasingly using streaming services, with take-up of Disney+ among online over-64s rising from 7% in 2022 to 12% in early 2023.