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The latest OTT data from research and consultancy firm Parks Associates indicate that at the end of 2015, approximately 20 per cent of US broadband households had cancelled at least one OTT video service in the past 12 months. In 2Q 2015, 18 per cent had done so.
Netflix is still the OTT leader in the US, with 52 per cent of all US 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 per cent of US broadband households cancelled their Netflix account, including those who cancelled at the end of the trial period. That figure represents 9 per cent of the company’s current subscriber base.
Five percent of US broadband households indicated that they had unsubscribed from Amazon’s Prime Video service in 2015, a figure that represents 19 per cent of those who claim to be current subscribers to Amazon Prime Video. Seven percent of US broadband households cancelled a Hulu subscription in 2015, representing approximately half of Hulu’s current subscriber base.
Research from Parks Associates’ OTT Video Market Tracker shows:
There were 101 OTT video services available in the US market as of March 2016. Only 5 per cent of US broadband households have a subscription to one or more of the 98 options beyond Netflix, Amazon, and Hulu. This list includes CBS All Access, Sling TV, HBO Now, and Crunchyroll. Three percent of US broadband households cancelled a subscription to an OTT video service other than one of the top three in the last 12 months.
“Several factors contribute to OTT video service churn by consumers,” advised Brett Sappington, Senior Director of Research, Parks Associates. “In some instances, consumers are experimenting with new services, trying a service and cancelling before the trial period ends or within a few months. 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. 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.”
Parks Associates’ OTT Video Market Tracker shows 33 new OTT services entering the US market in 2015. Among all US broadband households, 64 per cent of US broadband households subscribe to an OTT video service, up from 59 per cent in 2015.
“On a service by service basis, the smaller OTT video services have relatively high churn, particularly relative to Netflix and Amazon,” Sappington noted. “Reasons for cancellation vary by service, but there are some common trends. Cancellers of OTT services with linear features (such as Sling TV, CBS All Access, and PlayStation Vue) are more likely to subscribe with the intent to terminate the subscription after watching specific content. They are also more likely to be critical of a service’s interface than those who cancel VoD-only OTT video services.”