U.S consumers who stream now use seven subscription video-on-demand (SVOD) services and free streaming video services — up from five in April 2020, according to a new TV service switching study from The NPD Group.
NPD conducted online surveys among more than 5,000 U.S. streaming consumers in April and October of this year. (April data included past year free streaming users, while October 2020 data included past six-month users.)
“By and large, consumers want the ability to customize their viewing experience, bundling both paid and free services that provide them with the content they want, when they want it,” sums up John Buffone, executive director and industry analyst with NPD’s Connected Intelligence practice.
Access to exclusive content is a primary reason cited for paying for SVOD services, driving over 25% of engagement — but it’s also a prime reason that consumers switch services.
In fact, an increasing number of SVOD users — 21% in October, versus 14% in April — report decreasing engagement with a streamer or cancelling subscriptions because they feel other services offer better content.
Users of free services rose from 39% of total streaming users in April to 47% in October, as consumers increasingly use free ad-supported video-on-demand (AVOD) and free ad-supported streaming TV (FAST) to supplement SVODs.
Nearly all free streaming services experience lower churn than average, but they also have lower engagement rates — which means they must clearly differentiate their content to compete successfully in the long term.
Meanwhile, Parks Associates research finds that the overall annual churn rate for subscription-based U.S. OTT services — subscribers who have cancelled a service as a percentage of the current subscriber base — declined from 46% in third-quarter 2019 to 38% in this year’s third quarter. And within that overall universe, vMVPDs saw an even more dramatic decline, from 84% in 2019 to 49% in 2020.
Parks also reports that about 40% of U.S. broadband households have trialled at least one paid OTT service since the pandemic hit — obviously a key growth driver.
However, competition is heightening not only because of a growing number of paid and free services, but because COVID-driven content production challenges have decreased SVODs’ original content, driving viewers’ itch to add or switch services in search of new content.
And on the flip side, competition will also be heightened as SVODs return to releasing and marketing a flow of big-budget releases, points out Buffone.