Churn isn’t just an issue for traditional pay TV providers. Over-the-top services suffer it as well, of course. Parks Associates revealed OTT data yesterday showing that at the end of 2015, approximately 20 percent of U.S. broadband households had cancelled at least one OTT video service in the last year.
“In some instances, consumers are experimenting with new services, trying a service and cancelling before the trial period ends or within a few months,” Brett Sappington, senior director of research at Parks says. “Popular shows or events, such as HBO’s ‘Game of Thrones’ or WWE Network’s ‘Wrestlemania,’ can be beneficial in terms of attracting users. However, there is a risk that consumers will unsubscribe once they’ve watched these popular items.”
According to the research, Netflix is still the OTT leader in the U.S., with 52 percent of all U.S. broadband households subscribing to the service at the end of 2015. Netflix also had the lowest churn rate as a percentage of its total subscriber base. In the past 12 months, 5 percent of U.S. broadband households cancelled their Netflix account, including those who cancelled at the end of the trial period. That’s 9 percent of the company’s current subscriber base.
Five percent of U.S. broadband households indicated that they had unsubscribed from Amazon’s Prime Video service in 2015, which represents 19 percent of those who claim to be current subscribers to Amazon Prime Video.
Seven percent of U.S. broadband households canceled a Hulu subscription during the year, representing approximately half of Hulu’s current subscriber base.
“Ongoing perceived value, in the long run, is the biggest driver to churn. Services have to continue to provide users with validation of value and a reason to return. Otherwise, consumers will discontinue services to save money or because they feel that the subscription is not worth the cost,” Sappington concludes.