Despite concerns that consumers might use streaming media free-trials for their own gains, they seem to be a good investment.
According to Parks Associates’ later OTT Video Market Tracker, nearly one-third of OTT free trials convert to a paid subscription. In fact, only about 1% of consumers are what the firm calls "serial trial-ers" using multiple emails to extend free trial periods, according to the company.
“Most consumers use trials for their intended purpose of trying out a service before deciding whether or not to continue as a paid subscriber,” said Glenn Hower, a senior analyst with the firm, at the NAB Las Vegas show earlier this week.
According to the company, more than a quarter of U.S. broadband households subscribed to at least one OTT service in the past six months. Of them, nearly half (47%) subscribed to a trial service after the free trial period expired.
The study also found that average monthly spending on subscription OTT services has increased, reaching an average $7.95 a month per U.S. broadband household. Most of those households build their services around one of the top three providers: Netflix, Amazon and Hulu, which, Hower noted, also have the most effective trial conversion rates. The popularity of the big three providers means the smaller, niche services may have to look for different ways to attract consumers.
“Since there isn't much money left for niche OTT services, these services should not expect to expand beyond their particular audience niche and may also have to implement tiered services or hybrid business models to diversify their subscriber bases and generate incremental revenue wherever possible,” Hower said.