Lest pay-TV providers start thinking that their hotshot over-the-top rivals have it all, consider this latest tidbit: OTT services are dealing with churn, too. Big-time.
About 85% of U.S. broadband households subscribe to an OTT service, and in the last year about 4% of U.S. broadband homes pulled the plug on Netflix, comprising 9% of the Netflix customer base. Meanwhile, a massive 7% of broadband homes nixed Hulu Plus in the last year, wiping away about half of its subscriber base, according to Parks Associates, which produced the research report on churn.
The higher churn rate for other services is likely occurring as Netflix customers dabble in options purely for sampling purposes, suggesting that many of the lost subscribers were unlikely to ever become ongoing customers in the first place. In fact, sampling may become the new normal for this segment of video viewing, as consumers move in and out of OTT services depending on content offerings.
Whatever the reason, the numbers are cause for some concern, but they also underscore that OTT services, while red-hot, are on a path to confront some of the same challenges that traditional pay-TV operators face.
More than half of U.S. homes with kids under 18 are watching OTT services on a connected TVs, while the national average is 40%, according to a recent GfK report.