Tuesdata: How Amazon Prime Video has been winning the battle for new Aussie subscribers

Welcome to Tuesdata, our weekly analysis for Unmade’s paying members.

Today, we take a look at the state of streaming in Australia, analysing data from sources including Samba TV, Telsyte and Kantar. The numbers suggest that Amazon Prime Video and Paramount+ are beginning to emerge as counter intuitive winners.

Further down, a bad day for ARN Media and Seven on the Unmade Index.

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The streamers overtake the broadcasters

Television’s future has arrived.

After 60 years of the three-horse race of Seven versus Nine versus Ten (and 30 years of advertising on SBS) the free to air players are now competing in a field of more than a dozen major players battling for viewers’ eyes.

The subscription streaming space includes Amazon Prime Video, Binge, Kayo, Stan, Disney+, Netflix, Apple TV+, Britbox, Paramount+ and even YouTube Premium.

The purely ad-supported space is almost as competitive, with 9Now, 7plus and Tenplay taking on FAST (free ad-supported television channels) from TV manufacturers as well as the likes of YouTube and short form video consumption via social platforms.

With so much additional choice, no wonder broadcast audiences are falling.

The annual Media Consumption Survey, commissioned and published by the Australian Communications and Media Authority, suggests that broadcast television is now the third most common way of watching TV.

Until 2020, commercial free to air TV (watched over the airwaves) was the most common way to consume screen content, with 61% of people doing that every week. Two years on, that number had fallen to 53%, while in the same period subscription streaming services jumped from 60% to 66%.

Free BVOD services are now the second most common, rising from 54% to 58% of people in the same two-year period.

However, there is by no means a definitive winner in the new battleground. Yet.

Different data sets offer different parts of the picture. Research house Kantar releases quarterly information about share of new subscribers, based on a panel survey. Audience analytics company Samba TV looks at viewing habits. And Telsyte conducts its own quarterly local consumer survey.

The Samba TV data, published within the last fortnight, demonstrates how things have changed.

Two years ago, linear TV – broadcasts reaching viewers via their aerial – was still reaching just under 5.5m households, with many of them experiencing some form of Covid lockdown during that period.

Samba says that number is now falling back towards its pre-pandemic levels of around 5.2m.

The total number of hours being watched is also falling, says Samba.

This decreasing interest in linear TV is accompanied by a growing preference for streaming platforms. Subscription-based OTT (over-the-top) services witnessed a 3% year-over-year increase in penetration, building on a 5% growth observed from 2021 to 2022, says Samba.

This shift in viewer behaviour highlights the need for advertisers who traditionally rely on linear TV to adapt their strategies. Samba TV added a helpful, but ominous note for advertisers and media buyers in this part of the report: “Advertisers relying on linear to reach audiences should look to BVOD and streaming to engage consumers that have shifted away.”

The other critical question is how many people advertisements are truly reaching. There’s a significant divide in ad exposure among TV viewers in Australia – according to Samba TV’s data, approximately half of TV viewers, particularly those who consume the most linear TV content, find themselves exposed to the lion’s share of advertising impressions, accounting for a staggering 89% of ad exposure. On the other hand, the remaining half of TV viewers, those who engage less with linear TV, are exposed to a mere 11% of ad impressions.

What this means is that a substantial portion of Australian households in the lower half of linear TV consumption are barely reached by the ads. Conversely, the heavy consumers of linear TV, comprising the upper half, are subjected to a daily bombardment of approximately 70 TV ads. This relentless exposure to advertisements not only raises concerns about advertising wastage and risks ad fatigue. Such a clear shift in consumer viewing behaviours suggests a reevaluation of ad targeting strategies to ensure effective reach and engagement might be in order for buyers and advertisers.

Subscriptions soar for some

Meanwhile, August’s quarterly report from analysts Telsyte sheds more light on the state of the Australian subscription entertainment market in 2023. The report highlights a slowdown in the market’s annual growth over the past year, primarily attributed to rising cost of living.

Among those willing to pay for streaming video services, the average monthly budget has increased by 7% from a year ago to over $36. The increase is similarly in line with the average CPI inflation recorded in 2023. On the flip side, almost half of subscribers said they are are more likely to switch between different services to save money.

“Paid SVOD services as a category exhibits strong retention and near recession-proof characteristics, as other significant spending areas become household budgeting priorities,” says Telsyte MD Foad Fadaghi in the report.

SVOD services are still growing, reaching an estimated 24.6 million subscriptions by this June, a 5% increase year-on-year. However, Netflix, the market leader, experienced its first decline in subscribers. It coincided with its crackdown on account sharing and the introduction of an ad-supported tier. Nonetheless, it retained the top spot with 6.1 million subscribers.

The study found that 32% of SVOD subscribers share their passwords, with the majority intending to continue for as long as possible to save money. However, if required to pay for sharing, 48% said they would stop altogether. Samba’s data shows that budget-conscious consumers are unwilling to maintain multiple subscriptions, and are for the most part tapering their options to two at most. Throughout the first half of 2023, 75% of households watched content across two or less streaming services. This suggests that even with limitless options of content to watch across platforms, households are unlikely to pay for more than a few services over the course of a six-month period.

Telsyte found that more than 60% of non-SVOD users believe there’s enough quality content from free sources to satisfy their entertainment needs. BVOD services have remained popular, and affordable ad-supported SVOD plans have been introduced by platforms including Netflix and Binge.

Meanwhile Kantar offers yet another dimension – sharing data on new subscribers for each service.

The surprise leader in new subscribers was Amazon Prime Video, given away as part of the wider Amazon Prime membership. That growth is no one-off.

Looking at Kantar’s numbers over the previous five quarters, Amazon has been taking as much as 25% of new signups, making it the consistent leader.

Pulling out the streaming services aligned with local TV players, some of the results are counterintuitive.

While Foxtel Group’s Binge and Nine’s Stan both tend to hover around 10% of new subscribers, sister platform Kayo is much more exposed to the sporting cycle, falling to almost no share of the market in the summer quarter. Meanwhile Paramount+, aligned with Network Ten, is growing more steadily than many realise, including putting on the fastest growth in the summer quarter.

While Kantar indicates the trajectory, Telsyte offers an estimate of current share.

Telsyte estimates that Netflix retains its lead, despite its 3% year-on-year fall in numbers. However, Amazon Prime Video, up by 9% for the year, is closing fast. Meanwhile, Paramount+ – up a huge 41% for the year – moved past Kayo, and drew level with Binge.

The battle lines are drawn.

Unmade Index takes a downward turn

It was a poor day for most stocks on the Unmade Index yesterday. It fell 0.64% to land at 624.7 points. The Index measures how ASX-listed media and marketing stocks are performing on a daily basis.

Most of the stocks on the Index moved into red territory. ARN Media tumbled 6.63%, and Seven West Media followed closely with its 4.41% fall.

Southern Cross Austereo’s share price hit yet another all time low of 72.5c, giving the entire compamny a market capitalisation of just $173m.

Enero Group, Ooh Media and Domain dropped a respective 2.39%, 2.09% and 1.52%.

Nine fared better, lifting 1.01%. Printing and marketing firm IVE Group rose 5.26%, while Sports Entertainment Group posted a 5.26% increase.

That’s all for today. Thanks, as ever, supporting us through your membership.

We’ll be back with more tomorrow.

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