Global streaming service Disney+, which is set to launch in South Africa in May – is cutting into rival Netflix’s core areas of streaming dominance on the global arena.
This is according to market research firm Parrot Analytics, which notes that while Netflix claims to be competing against the likes of Fortnite and the need for sleep, new data reveals the streaming giant’s primary foes in the race for entertainment supremacy are its legacy media opposition, especially Disney and the newly-formed Warner Bros Discovery.
Yesterday, Netflix announced its financial results for the first quarter of 2022, with its revenue slowing as the competition in the video-streaming market intensifies.
The US-based streaming giant revealed it lost about 200 000 subscribers during the first quarter of the year. This is the first time the company has lost subscribers in the past 10 years.
Among other issues, Netflix blamed the fierce competition in the market, as well as account sharing among its clients for its below-par performance.
“Our revenue growth has slowed considerably as our results and forecast show. Streaming is winning over linear, as we predicted, and Netflix titles are very popular globally,” says Netflix in a statement.
“However, our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds.”
Broad broadband bonus
Netflix adds: “Competition for viewing with linear TV as well as YouTube, Amazon and Hulu has been robust for the last 15 years. However, over the last three years, as traditional entertainment companies realised streaming is the future, many new streaming services have also launched.”
As the company announced huge subscriber losses, its share price fell about 27%.
Amid the stiff competition, the subscription video-on-demand (SVOD) firm is forecasting a global paid subscriber loss of two million for the second quarter. The last time it lost subscribers was October 2011.
“Since launching streaming in 2007, we’ve operated under the firm belief that internet-delivered, on-demand entertainment will supplant linear TV, and that this transition represents a once-in-a-generation opportunity to build a highly-popular and profitable entertainment company.
“People love movies, TV shows and games; broadband and smart TV penetration continue to grow globally with more and more connected devices; and while hundreds of millions of homes pay for Netflix, well over half of the world’s broadband homes don’t yet, representing huge future growth potential,” says Netflix.
Parrot Analytics notes Netflix’s demand share of streaming originals once again hit new lows in Q1 2022, sitting at 45.2% globally (down from 45.4% in Q4 2021) and 42.4% in the US (down from 43.6% in Q4 2021).
Meanwhile, it notes competitors HBO Max, Paramount+ and Disney+ – all SVODs backed by traditional media conglomerates – saw significant gains in the most recent quarter.
Global demand for original content from all of Netflix’s competitors grew 80.8% between Q1 2020 and Q1 2022, more than triple the 25.5% growth for Netflix originals over the same time.
According to Parrot Analytics, Netflix’s modest global demand growth of late has tracked remarkably closely with its slowing subscriber growth over the same time (up 21.3% worldwide from Q1 2020 to Q4 2021), showcasing the pivotal link between demand for original content and SVOD subscriber growth.
Nonetheless, it points out Netflix is still the single most dominant player in the streaming industry, especially in demand for original content, a key leading indicator of subscriber growth.
“But as several nearly century-old firms erode the incumbent’s market share, Netflix is reaching a point where it needs to focus more on subscriber retention, especially in North America, while its legacy media-backed competitors Disney+ and HBO Max continue focusing on subscriber growth in key international territories,” the firm says.
Parrot Analytics adds that from Q1 2020 to Q1 2022, the total global demand for Netflix originals increased by 25.5%, while the global demand for originals from all other streamers combined grew 80.8%, more than triple the growth of Netflix.
Dramatic market share drop
The global content demand analytics firm believes Netflix’s slowdown in the growth of demand for its original content is seemingly tied directly to its slowdown in subscriber growth over the last two years.
“From Q1 2020 to Q4 2021, Netflix’s global subscribers grew from roughly 183 million to 222 million, a 21.3% increase in total subscribers. This is remarkably similar to the 22.8% growth in total demand globally for Netflix originals from Q1 2020 to Q4 2021, showing the key link between demand for original content and subscriber growth.
“The gap between the growth in demand for Netflix’s competitors’ original content and its own is further evidenced in Netflix’s market share dropping dramatically in the past two years – from 55.7% to 45.2% globally, and from 52.4% to 42.2% in the US between Q1 2020 and Q1 2022.”
Meanwhile, Disney+, which is looking to steal market share from the likes of Netflix in SA, yesterday revealed its annual R950 subscription is now available locally.
The streaming service will launch in SA on 18 May, with standard pricing at launch confirmed at R119 per month.
Teasing the South African market, Disney+ says subscribers will have access to Star Wars’ “The Book of Boba Fett” and “The Mandalorian” from executive producer and writer Jon Favreau and, from 27 May, the highly-anticipated “Obi-Wan Kenobi”.
When it launches, it will compete with MultiChoice-owned Showmax, Netflix, Prime Video from Amazon, Apple TV, BritBox and eMedia Investments’ online video-streaming service eVOD, to name a few.
Netflix fixed monthly fees range from R49 to R199 a month.
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