Netflix was the top-ranked streaming video service in 2021, with 21% share of the U.S. subscription video on demand (SVoD) market, but market research firm GlobalData said the OTT giant is starting to see its growth slow down.

The data indicates that Netflix may be starting to feel the impact of new competition in the premium SVoD space, and all players will need to take steps to stay competitive.

GlobalData analysts observed that to compete going forward, SVoD services will need to provide evocative content, find an effective niche or build partnerships with other entertainment providers to stand out in the field.

Meanwhile, Netflix notified subscribers that it is raising fees for the first time since 2020, beginning immediately for new subscribers in the U.S. Existing subscribers will begin to see the higher rates rolled out gradually in the near future.

The new rates for a basic plan (one screen at a time; no HD) increases $1 per month to $9.99.

The standard plan (two screens, with HD) increases $1.50 to $15.49 per month.

The 4K plan (four screens plus 4K) increases $2 per month to $19.99.

Comparatively, a standard subscription plan for HBO Max is $14.99 per month(without discounts), a standard plan for Hulu is $12.99 per month (add-free), monthly fee for Amazon Prime Video membership is $12.99, and a standard plan for Disney+ is $7.99 (single-tier subscription plan).

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Francesca Gregory, GlobalData associate analyst, said: “We have already started to see Netflix branching out to different areas, with the launch of Netflix Games in November 2021 and a co-streaming partnership with Twitch. Reaching different audiences will continue to be a key strategy. I wouldn’t be surprised if the company looked to experiment with more gaming streaming platforms in the future. Subscribers can look forward to having a more rounded service and seeing large franchises converted into shows. This may, at the same time, leave subscribers torn between different platforms.”

GlobalData said that content portfolios will be the key to remaining relevant for any streaming service moving forward, and strategic content spending will be essential for streaming services to retain their market position.

Gregory added: “Netflix experienced a slow start to 2021, following a light slate of content as pandemic production problems came to the fore. Although fresh content in its third quarter boosted subscribers to 214 million, competing platforms are experiencing explosive growth. Disney+ amassed 118 million subscribers by November 2021, just two years after its launch. Bezos also boasted that 175 million Amazon Prime subscribers had streamed content last year. Although subscriber accounting across platforms varies, it is clear that 2022 will be characterized by increased competition.

“As the number of streaming platforms increases, and the market approaches peak fragmentation, SVoD platforms will use content portfolios to differentiate themselves. The trend of huge content spending will continue, with franchises that are likely to attract a loyal fanbase standing to benefit in the next year. This trend is already in motion with Amazon committing $1 billion on its Lord of the Rings series before a single episode has hit viewers’ screens. Meanwhile, SVoD services with smaller budgets will target niche audiences. For example, Paramount+ will aim to serve the long-neglected Gen X audience with its content selection. Companies that fail to secure a market niche will have a limited shelf life in the crowded SVoD market.”

“The ‘all you can eat’ business model has proven popular with streamers so far. However, this means that to grow revenues, streaming platforms will need to seek new audiences. A series of strategic partnerships between video streaming, gaming, and podcast companies will take place. The launch of Netflix Games in November 2021 and a co-streaming partnership with Twitch for select content is evidence of some of the ways this diversification will take place,” concludes Gregory.

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By Greg Tarr

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