Streaming Wars: Discover The Secret Behind Netflix's Top-Rated Content Recommendations

Ad-supported streaming is driving significant growth within the global streaming sector, both in paid (AVoD) and free forms (FAST). Both formats have experienced substantial growth throughout Q2 2024, continuing an impressive upward trajectory over the past year.

Kantar, a leading marketing data and analytics firm, has released its latest Entertainment on Demand (EoD) report. This study examines global video streaming trends from April to June 2024.

Ad-supported services accounted for 47% of all new services adopted in Q2 2024, highlighting the pivotal role ads are now playing in the streaming video on demand landscape. Consumer acceptance of ads is also rising, with 49% of households globally willing to adopt ad-supported services to access cheaper content.

Andrew Skerratt, Global Insights Director at Kantar, comments: "It's clear that ads provide streaming services with opportunities to diversify their revenue streams while catering to diverse audience preferences, with the tiered approach providing flexibility for consumers. However, the impact of ads on the viewer's experience cannot be understated.

"Currently, only 22% of people enjoy the ads they see on streaming services, and less than a quarter find them relevant. Nearly one in three want more tailored ads, and with only 20% linking a streaming ad to a purchase of a new product or service, there's plenty of potential for marketers to improve their return on investment."

Among major streamers, discovery+ has excelled in delivering an effective ad experience. Viewers appreciate the balance in commercial quantity and ad break length on discovery+, enhancing rather than detracting from their viewing experience.

Viewers' attention is increasingly divided among multiple streaming services, with an average 4.6 VoD services per household. This means the quality of recommendations within a platform becomes crucial. Currently, only 8% of viewers are satisfied with the recommendations provided by their VoD services – Netflix enjoys the highest satisfaction rates while other platforms contest for second place.

Netflix's recommendations are bolstered by its advanced algorithms, now enhanced with AI. The platform excels in adapting and learning from viewing patterns to offer tailored content suggestions – Netflix's dynamic thumbnails and ads stand out, appealing to individual users based on their likely interests.

It's no wonder that 37% of streamers turn to Netflix to discover new content – far ahead of Prime Video in second place with 14%. Interface issues also play a significant role in cancellations; while 30% of cancellations were attributed to content dissatisfaction in Q2, 24% were due to problems such as difficulties finding content or poor ad experiences.

In Q2, Netflix experienced high engagement levels, largely driven by the release of the new season of Bridgerton. This series was the most enjoyed and most viewed of the quarter, directly accounting for 14% of new subscriber sign-ups driven by specific content.

Prime Video also saw significant success, with Fallout ranking as the second most enjoyed and third most viewed show of the quarter, further bolstered by The Boys and Clarkson's Farm. Meanwhile, Disney+'s Japanese historical drama Shogun performed well, securing the sixth spot for most viewed and fifth for most enjoyed show. Additionally, the release of series 20 of Grey's Anatomy was a major attraction for new Disney+ subscribers.

Discovery+ emerged as a standout performer in Q2 2024, building on an already strong Q1 and becoming the fastest growing paid VoD service by subscriber growth. Partnerships and strong advertising campaigns have been fundamental to this growth, paired with their robust slate of reality and sporting content.

Despite this, and in a similar manner to Apple TV+, discovery+'s higher churn rates will present challenges moving forward, especially for households attracted by specific content. Discovery+ will be hoping the Olympics can continue this growth trajectory, with early signs looking extremely positive.

The study highlights that almost half (49%) of households are now willing to accept ads for cheaper service options. Specific content remains crucial for attracting new subscribers; Bridgerton on Netflix was particularly popular in Q2 2024.

Both discovery+ and Apple TV+ have shown rapid growth among paid VoD services during early 2024. Discovery+ led this trend in Q2 2024 after a soft first quarter saw Prime Video rebound strongly.

"Apple TV+ remains the only major multi-market streaming service without an ad tier," Skerratt continues. "Even with a smaller reach than some competitors, advertisers would appreciate engaging with a premium audience."

The report underscores that Netflix's Net Promoter Score (NPS) remains top across all platforms. Apple TV+ has seen notable improvement too; it now holds second place among major multi-market streamers with an NPS score of +33.