Mexico. Competition in the subscription video-on-demand (SVOD) streaming platform market has intensified. Thus, audiences today have increasingly diverse alternatives in terms of content, prices, complementarity with other digital services, among other favorable conditions that have boosted their access and spending dedicated to their hiring.
Subscription Streaming Contracting
As of the second quarter of 2023 (Q2-2023), there was an accounting of 13.2 million subscriptions to video streaming platforms by subscription, a figure equivalent to an annual growth of 4.4%, lower than that previously registered.
At the beginning of 2023, the 'push' brought about by the pandemic in the hiring of these entertainment channels came to an end, such that the growth in the number of subscriptions began to slow down significantly. During Q2-2023, the rate of increase in these was cut to almost half of that registered a year ago (8.4%), in Q2-2022, and only represents a third of that reached during Q2-2021 (13.8%).
This is derived from the significant expansion that this market had during the pandemic, but which today faces increasing competition with other forms of entertainment (face-to-face and digital), as well as the complex macroeconomic environment, as a result of accelerated inflation and the decline in the purchasing power of the population.
Average User Spend
In terms of spending, the average allocated to the hiring of subscription video streaming platforms has increased significantly in recent periods. This, as a result of the increase in prices of these services, as well as the introduction of additional fees for account sharing (Netflix).
These circumstances have driven the average monthly expenditure destined for the hiring of video streaming platforms by subscription to $ 186.7 pesos per month, level 7.1% higher in its annual comparison.
Despite having introduced locks to account sharing, 6 out of 10 share the account with their friends and family and only 37% have their own subscription to these platforms. However, the average number of subscriptions per user has been reduced to 1.7, lower than the average recorded six months ago (1.8 platforms per user).
The growing interest of audiences in accessing and enjoying the diversity of content offered by competing players had driven the hiring of two or more platforms by users. However, the adverse macroeconomic environment, together with the additional charge for account sharing, has led to the reduction of this ratio by just under half (47%) of users.
All these conditions are added to the growing relevance of the offer of content for free through streaming platforms with advertising (AVOD for its acronym in English) that have slowed down the hiring of those alternatives by subscription. This has triggered the interest of these players to introduce a model financed in a complementary way by advertising, by offering a reduced price of their platforms, but with built-in ads.
This route would reverse the downward trend in the growth of platform contracting and enable access for people who, due to their low purchasing power, cannot now get an account.
Text written by Radamés Carmargo, Analysis Manager of The Competitive Intelligence Unit, The CIU.
