In Scandinavia, demand for digital entertainment (both video streaming and audio) continues to grow as the region emerges from lockdown.
Revenue from video streaming is growing, due mainly to an increase in subscriptions by consumers in older-age groups. Meanwhile, competition intensified to retain younger consumers, and new business models are needed to retain consumers and increase revenue streams. Audio remains popular, and the growing podcast market is proving especially interesting with the launch of new subscription models.
The streaming market in Scandinavia continues to flourish
Our survey found that 68% of Scandinavian respondents have access to at least one Subscription Video-on-Demand (SVOD) service. This is an increase of eight percentage points from 2020. This growth indicates that Scandinavian consumers have increased the number of their VOD subscriptions during the pandemic, rather than cancelling one service in favour of another.
Netflix remains the market leader in Scandinavia, with 56% of respondents having access. At half the size of Netflix, HBO Nordic is the second largest SVOD provider, with 25% of respondents having access. However, HBO’s subscription base is expected to increase with the launch of HBO Max in Denmark, Sweden and Norway in the autumn of 2021. After its launch in September 2020, Disney+ experienced a surge in subscriptions and has become a prominent player in the streaming market, 24% of respondents having access in 2021.
Among the largest providers in Scandinavia, Amazon Prime Video is the least popular provider. However, Amazon has not yet introduced its full range of services to the Scandinavian market, and it has gained substantial numbers of VOD subscriptions in other markets by including them as an add-on feature in their full-service subscription model. In the Nordics, the full-service model has been launched only in Sweden. In September 2021, Amazon launched a premium membership programme with access to free and fast delivery, exclusive deals, and the SVOD service Amazon Prime Video for SEK 59. Our survey shows that compared to before this full-service launch, the number of Swedish respondents having access to Amazon Prime Video almost doubled from 2020 and 2021. From being the Nordic country with the lowest percentage of Amazon subscribers in 2020 (4%), Sweden has the highest in 2021 (7%). With the latest development and the new premium subscription model, we expect the number of Swedish Amazon Prime subscribers to increase, as well as in the remaining Nordic countries if Amazon decides to enter with full force.
Access to SVOD services among Scandinavians
New subscriptions and churn
There has been a 9% increase in subscriptions in the past year among 45- to 64-year olds, which might explain much of the growth in total subscription numbers.
Development of SVOD services in the past 12 months
Younger subscribers (18- to 24-year olds) change their SVOD services more frequently. They are more likely to add and to cancel services, with nearly 34% cancelling services in 2021 compared to only 32% subscribing to a new service. As a result, their numbers may be nearing a ‘ceiling’ in terms of SVOD. That said, 14% re-subscribed to a service they had previously cancelled, and well over half of those who cancelled a service say they are planning to re-subscribe to the same service in the future.
SVOD changes in the past 12 months
It seems that the SVOD market is slowly maturing, and may be entering a period in which the focus of service providers will shift towards retaining existing subscriptions, managing churn, making it easy for those who have cancelled their subscriptions to return, and generating new revenue streams.
For SVOD providers, it is crucial to offer a unique value proposition that drives loyalty and succeeds in retaining existing customers. An apparent area for focus is therefore original content production that is exclusively available on their platform. Offering the same content as the rest of the market is no longer enough, but SVOD providers face higher costs. The competition for content has been severe for a long time but continues to intensify. In 2021, Amazon bought MGM, the Hollywood studio behind the James Bond and Rocky franchises (and many others), to secure must-watch content.
Scandinavian consumers are open to new business models
Even though we observe market growth in 2021, we expect the substantial rate of growth in recent years to decline and normalise in the future. In a flat market development situation, the focus shifts towards retaining customers, lowering churn, obtaining customers from other providers and generating new revenue streams.
One possible revenue stream might be to introduce advertisements, or for ad-free services, to license exclusive content after some time to services that do have ads. Our survey indicates that Scandinavian consumers are open to Advertising Video-On-Demand (AVOD) services, in which subscribers can choose to switch from a paid-for ad-free subscription to a partly or entirely ad-funded service. When asked which payment option they prefer, 33% of respondents prefer discounted or free subscriptions that include ads, although most prefer a full-price subscription in order to avoid ads.
Younger consumers in particular prefer AVOD. Almost half (48%) of 18- to 24-year olds prefer a discounted or free subscription, compared to only 20% of 65- to 75-year olds who prefer that option. More men prefer a full-price subscription (39%) compared to women (29%).
Preferences for new SVOD payment options
The AVOD business model can attract price-sensitive customers and be more profitable, given the large commercial value in advertising. The Disney-owned streaming provider Hulu uses a hybrid business model, where 70% of its users have chosen an ad-supported subscription rather than the traditional full-cost and no-ads option. Interestingly, revenue per subscriber is higher for the lower-priced ad-supported option than for the full-price subscription without ads.
In addition, Netflix has released global viewing data that show a staggering 625 million of global viewing hours during the first 28 days of their most popular series Bridgerton. This data insight from Netflix indicates the potential number of viewers and the commercial value that advertising may generate if featured with the most popular SVOD content.
Numbers for all audio platforms increased during the pandemic
In 2021, Scandinavian consumers have continued to listen extensively to audio streaming services. Music streaming remains the most popular online audio activity across all age groups, with 31% of Scandinavian consumers streaming music daily. The youngest age groups do most music streaming, and the percentage of consumers streaming music daily decreases with age.
The podcast market is growing. In 2021, 15% of Scandinavian consumers listen to podcasts daily compared to 9% in 2020. Another 9% say they have listened to more podcasts during the pandemic. Podcasts are more popular among consumers in their mid-twenties (23%) and early-thirties (19%), and the oldest age groups are by far the least likely to listen to them. However, interest in podcasts is increasing, and the market seems to be growing, partly due to the pandemic. Interestingly, for respondents older than 45, the percentage of daily listeners is higher for audiobooks (11%) than for podcasts (9%).
Audio streaming at least once a day
New subscription concepts for audio content
A paid subscription is a mature concept in the audio streaming market in Scandinavia, and this is especially true for streaming music. Almost half (43%) of respondents in the survey have access to paid music streaming services, much higher than for paid podcast or paid audiobook services. Looking at paid podcast subscriptions, 14% of consumers currently have access in Scandinavia. As podcast consumption has increased, the focus on new paid subscription platforms is intensifying for a wide range of podcast content.
Access to paid audio services or subscriptions
In 2019, Denmark launched the paid subscriptions podcast platform Podimo. Interestingly, Denmark has the lowest rate of podcast subscriptions (8%), compared to Norway (14%) and Sweden (16%). In Norway, Podimo launched during the autumn of 2021 is expected to increase the share of paid podcast subscriptions. In addition, the Swedish premium podcast company PodMe is strengthening its position in the Norwegian podcast market. Schibsted has increased its stake in this paid subscription platform and has subsequently invested heavily in the most popular Norwegian podcast content. Thus, the podcast market is transforming from free content to paid subscriptions, with premium podcast platforms exploiting consumers’ hunger for popular audio content.
Video and audio streaming have flourished during the pandemic. The SVOD market calls for a higher focus on customer retention, churn management, and revenue models, while the podcast market provides a business opportunity in the media landscape.