Commentary

OTT Churn Still High

While the over-the-top industry has enjoyed tremendous growth lately, a new report shows consumers are also regularly canceling such services.

Consider this: By the end of 2015, it was reported that about 20% of U.S. broadband homes had shuttered their over-the-top video service subscriptions in the past twelve months. That’s a slight rise from the second quarter of 2015, when the snip-snip number came in at 18% overall.

The data comes from Parks Associates, which found that Hulu took the biggest brunt of the cancellations, with Netflix enjoying the lowest churn.

To understand the reach of OTT services, bear in mind that there were more than 90 million U.S. broadband homes at the end of last year, according to Leichtman Research.

In its research, Parks Associates reported that 52% of U.S broadband homes were Netflix customers. In the last year, 5% of U.S. broadband homes had nixed their Netflix service, representing 9% of the customer base.

advertisement

advertisement

Meanwhile, 5% of homes also said goodbye to Amazon Prime last year. However, that comprises 19% of consumers who say they subscribe to Amazon Prime Video.

Hulu suffered the larger number of defections. Parks found that 7% of U.S. broadband homes kiboshed Hulu last year, a number that accounts for half of Hulu’s customers.

However, the churn rate for most of the OTT services was about the same for the year as it was in the second quarter, suggesting at least there is consistency.

Even so, cancellations remain an ongoing issue. Parks attributes the high amount to consumer experimentation with new services. Many consumers try one or a few of the OTT services and cancel before the trial period ends. Popular shows can also drive an uptick, and then consumers cancel when they’ve finished binge-watching.

However, the market is still growing. About 64% of all U.S. broadband homes are subscribers to an OTT service, an increase from 59% in 2015, Parks said.

Next story loading loading..