Seen “Squid Game” yet? Looking at Netflix’s Q3 numbers, there’s a good chance that you have. The company said the surprise hit series was viewed by 142 million subscribers — more than half its total subscriber base — making it the top show in 94 countries.
It’s the latest dispatch from the streaming wars front. There will be more for sure.
The streaming entertainment leader added 4.4 million households in the latest quarter leaving Netflix with over 213 million paid subscribers, versus the 116 million last reported by its closest competitor, Disney+, which added 12.4 million net new subscribers to get there. Disney also owns Hulu and ESPN, bringing its total streaming base to 174 million subscribers.
While the initial growth of Disney+ was meteoric compared to Netflix’s longer climb to the top, Variety reported that Disney CEO Bob Chapek told analysts last month to expect “low single-digit millions of subscribers” for the quarter ending September 2021.
How The Mouse will react to a projected slowdown in Disney+ subscribers is sure to be more irresistible programming like The Black Widow and The Mandalorian, but the Netflix juggernaut is looking harder to beat as it merchandises hits like “Squid Game” on the Netflix Shop while a vast grey market of “Squid Game” Halloween costumes floods marketplaces like Amazon.
It shows the streaming wars heating up as platforms strategize against pressing subscription fatigue and its eventual impact on the number of paid streaming services consumers will keep.
PYMNTS September 2021 Subscription Commerce Conversion Index, a sticky.io collaboration, said “Cost-cutting is the top factor driving potential cancellations among nearly every generation [and] is especially common among Gen X subscribers.”
See also: The Subscription Commerce Conversion Index
Cross-Merchandising in a Crowded Field
Coming out of the pandemic — if indeed we are — consumers have amassed a pile of subscriptions from retail products to streaming services. As Hollywood studios and TV giants move to replicate the Netflix model, the space is fracturing into multiple offerings with Amazon Prime, NBC’s Peacock, CBS’s Paramount+ and HBO Max among the topmost players.
Many see a correction coming. The recent study Optimizing Subscription Payments: How Providers Can Take The Sting Out Of Payment Declines, a PYMNTS and FlexPay collaboration, notes, “More than 80 percent of consumers have at least one subscription, up from 72 percent in February 2020, but our research has found that the number of consumers with subscriptions has leveled off over the past six months.”
To fight off a possible wave of cancellations, streaming services are trying various strategies. For example, Target is expanding its partnership with Disney, with PYMNTS reporting that “By the end of 2021, more than 160 Target locations will have Disney stores within their toy section, selling merchandise from popular Disney properties such as Star Wars and Raya and the Last Dragon. Target said it will also grow the dedicated online Disney section of its website.”
See also: Optimizing Subscription Payments
It Comes Down to Cost
Whether teaming up with retailers on show-themed merchandise can prevent a slide in streaming subscriptions is unknown as of now. However, consumers are already spending more than they think on subscriptions overall, which may not bode well for all streaming providers
PYMNTS October 2021 Subscription Commerce Tracker® produced in collaboration with Vindicia, notes, “U.S. consumers found that they now spend an average of $273 monthly on their subscription services, compared to $237 each month in 2018. This represents a 15 percent boost and equates to more than $430 in addition annually.”
The Tracker adds that “many consumers underestimate the amount they spend on their subscription services. Eighty-nine percent of respondents’ estimates undershot what they actually spent each month on subscriptions, and almost half were off by more than $100.”
As consumers who went on a subscription spree during 2020 pandemic lockdowns and well into 2021 start doing the math, expect more bundles, retail ties-ins and possibly some dropouts.
It could happen. Netflix itself experienced this earlier this year, with CNBC reporting that “Netflix benefited from a surge of demand for its streaming service in the first six months of the pandemic, adding nearly 26 million subscribers in the first six months of 2020. The company didn’t see those gains coming at the time, and now it underestimated the pullback as the pandemic appears to be winding down.”
See also: The Subscription Commerce Tracker®
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