Swedish consumers are becoming more price sensitive and are increasingly cancelling streaming subscriptions to save money. At the same time, the fight for the Swedish consumer is intensifying. With Netflix as clear Swedish market leader, the other streaming providers are fighting for the 2nd place. To be able to defend, and grow, market share, streaming providers need to find new ways to differentiate and build strong value propositions towards the Swedish consumers.
Increasing subscription fatigue and price sensitivity
During the pandemic, consumers increased both the time and money spent on streaming services. Now, post-pandemic and with rapidly increasing costs of living, consumers’ habits and priorities are changing. Consumers are becoming increasingly price sensitive and are cancelling rather than adding streaming subscriptions, making for a challenging market for streaming providers.
The average Swedish consumer now has 2.3 paid streaming subscriptions, a 21% decrease compared to last year. Furthermore, 1 in 3 state that they are likely to cancel one of their existing subscriptions in the next 12 months, in an effort to save money or because they find the price of a certain subscription too high. In line with this trend, the overall willingness to pay for streaming is falling compared to 2022. Total streaming budget falls to 250 SEK/month, down from 300 SEK/month last year and willingness to pay for individual subscriptions falls from 130 SEK/month to 125 SEK/month.
Overall, price remains the most important purchasing criteria, with a 4ppt increase in relative importance since last year, followed by broad selection of content and frequency of adding new content.
Streaming providers thus need to find the right approach to keeping their streamers satisfied with both content and price to prevent churn and enable future growth. This will require differentiation in the offering and the corresponding price points. Broadly speaking, we find 3 main consumer segments:
- The price-sensitive: Streamers considering subscription price as the single most important purchase criterion, accounting for 35% of consumers
- The price-value-oriented: Streamers who see subscription price as an important criterion, but also believe that content-related purchase criteria are relevant. This segment accounts for 45% of consumers
- The value-oriented: Consumers who consider content-related aspects as key purchase criteria while subscription price is relatively unimportant. The value-oriented segment account for 20% of consumers
Differentiation is the key to winning
These three segments show that offer customization is key to strike the balance between offering the relevant content and the right price points to different parts of the market.
For consumers that value content over price, providers can offer premium packages with extensive and frequently renewed content, and flexible streaming options. For the price sensitive segment, they can instead consider flexible, low-priced packages incl. ad-supported offerings, which some players are already testing out. However, this type of offering needs to be carefully analysed and designed to reduce the risk of cannibalization. Based on our survey, up to 50% of those interested in ad-supported options would down-grade from an existing full-price offering.
Increasingly competitive market
Not only are consumers becoming more restrictive when it comes to streaming spend, but the fight for the consumer is also intensifying as more players are entering the market. Netflix is the clear #1 on the Swedish market. Among consumers with only 1 streaming subscription, 54% choose Netflix, whereas there is a close race among the remaining providers to be #2 in the market.
Consumers with 1 paid streaming subscription subscribe to:
When consumers were asked how they perceive each of these players to perform on value relative to price, there is a clear divide between the American players and the Swedish players where the American streaming services are considered to significantly outperform the Swedish providers. The price/value perception for the Swedish players has deteriorated since last year.
To be able to effectively compete for the consumers’ attention and budget, streaming providers thus need to make sure they have a strong value proposition that make them stand out relative to the other players in the market.
Getting this right is by no means easy and requires a comprehensive understanding of the market positioning and consumer perception on performance on the relevant purchasing criteria. Collecting more in-depth understanding of these factors will allow streaming providers to start defining a more clear and distinct positioning and value proposition relative to other players in the market.
In summary, the Swedish streaming market is facing a lot of challenges. To stay competitive on this market will require streaming providers to consider new ways to differentiate their offering to meet different customer needs and to establish more clear value propositions to distinguish themselves more clearly relative to the competition.
With more than 35 years of experience, we have helped subscription businesses achieve profitable growth through value proposition and market positioning, pricing, packaging and other commercial excellence strategies.
Are you interested to hear more how we can help you achieve growth in the streaming market? Reach out to us!
