Streamers shift focus to ‘loyalists’ as cost-of-living bites

The preference for advertising-supported services has been steadily growing, due largely to cost-of-living pressures and the price increases of paid streaming subscriptions.

Sirens. Milly Alcock as Simone in episode 101 of Sirens. Cr. Macall Polay/Netflix © 2025

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Australians’ appetite for cheaper ad-supported streaming services is growing apace, as major global players such as Netflix, Prime Video and Disney+ shift their focus away from acquisition of new customers and towards longer-term retention of existing subscribers.

More than a third of all Australian households now have at least one advertising-based video on demand (AVOD) subscription, according to data to be released on Monday by global audience measurement company Kantar.

The preference for AVOD services has been steadily growing in recent years, due largely to cost-of-living pressures and the steady price increases of streaming subscriptions.

At the end of 2023, just 10 per cent of households subscribed to an ad-supported streaming service – a year later, it had surged to 28 per cent.

At the end of last month, it had reached 34 per cent.

Kantar consumer director Andrew Northedge said the shift to AVOD suggested customers were no longer resistant to the interruption of advertisements during programs on ad-supported streaming services.

“The numerous price hikes, and increasing acceptance of ads from consumers, has resulted in sustained growth of paid ad-supported tiers in Australia,” he said.

There are now 27.3 million streaming subscriptions held in total across all Australian households, an increase of 1.4 million quarter-on-quarter.

The practice of “stacking” – when users subscribe to multiple platforms simultaneously to access a wider range of content – continues to increase, with the average number of services in Australian households sitting at 3.4, up slightly from the previous quarter.

Mr Northedge said the major global services’ renewed focus on retention was showing signs of paying off.

“As the total VOD (video on demand) market edges towards saturation and the cost of acquiring customers increases, global players have placed further focus on retaining existing subscribers via widened content types – sports, live events, video podcasts – and improved user interfaces like AI-powered recommendations, intuitive browsing, shoppable content,” he said.

Kantar’s report on the data also observed the reduction in churn over the second quarter, as the big three – Netflix, Prime Video and Disney+ – prioritise customer retention ahead of acquisition of new subscribers.

(FILES) The Netflix logo is displayed at the entrance to Netflix Albuquerque Studios film and television production studio lot in Albuquerque, New Mexico, on October 13, 2023. Netflix reported stronger than expected second-quarter results on July 17, 2025, with profit jumping 45 percent year-over-year as the streaming giant benefited from subscription price increases and a growing advertising business. Revenue climbed 16 percent to $11.1 billion in the quarter ended June 30, beating analyst estimates and the company's own guidance, while net profit surged to $3.1 billion. (Photo by Patrick T. Fallon / AFP)

“This strategy appears to be working, with the three major global services all enjoying an increase in quarterly retention in the second quarter of 2025,” Mr Northedge said.

“Netflix continue to have the lowest churn rate in the category at just 6 per cent, while Prime Video hold the second-lowest at 8 per cent.”

Netflix, Prime Video and Disney+ also increased the proportion of customers that have been subscribing for more than two years, with these “high-value customers” seen as the key to generating returns on investment for streamers.

“Netflix have the highest number of long-term loyalists, with 73 per cent having stayed with the service for 2+ years, followed by Prime Video (63 per cent) and Disney+ (52 per cent),” Kantar’s analysis reads.

“Prime Video benefit from having around a third of their members locked in on annual plans, comparatively high compared with other competitors that also offer annual subscription options.”

In the second quarter of 2025, Warner Bros Discovery’s streaming service Max, which launched in Australia on March 31, had the greatest share of new subscribers, accounting for a fifth of all new subscriptions from April 1 to June 30.

The most viewed title of the quarter, across all streaming services, was Netflix’s dark comedy series Sirens.