SVOD’s profit challenge to drive further price pressure

Netflix and Disney+ lead profitability while smaller operators face a restructuring risk amid maturing market growth.

David Kennedy · Venture Insights27 September 2024Period: FY244 min read

2023→

Year Disney+ first achieved a profit

2025→

Expected year for next round of SVOD price increases

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Abstract

Today, Netflix’s global dominance of SVOD seems set in concrete, with a successful 2023 crackdown on password sharing driving a return to subscriber growth. Amongst the other global streamers, only Disney+ has achieved a profit (in 2023). We think the next step for SVOD is another round of price increases, possibly in 2025 as economic growth picks up. But there is a risk that Australian households won’t play that game. If that is replicated globally, a medium term restructuring of the industry is likely.

Key Takeaways

Netflix remains the dominant SVOD player in Australia despite a drop in penetration from over 60% to approximately 55% in FY24.
Disney+ and Stan have both lost significant ground in household penetration as consumers minimize expenses.
Amazon Prime saw the smallest decline among the 'big four,' likely due to being the cheapest leading provider.

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Frequently Asked Questions

Only Netflix and Disney+ have achieved profitability among the global streamers, with Disney+ reaching this milestone for the first time in 2023. All other major players continue to face unsustainable losses that threaten their long-term viability in the Australian market.

Netflix remains the dominant provider despite a recent decline in household penetration from over 60% to approximately 55% as of August 2024. It maintains a significant lead over Disney+, its closest global competitor, which currently holds a 30% penetration rate.

A new round of price hikes is forecasted for the second half of 2025, coinciding with an anticipated return to economic growth. The success of these increases is critical, as a failure to sustain higher pricing may trigger a medium-term industry restructuring or service withdrawals.

The 2025 launch of Max will disrupt the market by denying premium content to current incumbents such as Foxtel and Binge. This shift occurs as major players like Disney+ and Stan are already losing ground due to consumers minimizing discretionary expenses.

SVOD’s profit challenge to drive further price pressure

Abstract

Key Takeaways

Frequently Asked Questions

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