More than other premium streamers, Netflix maintains its customer base far better than newer and upcoming major CTV premium platforms -- as well as being comparable to traditional stable pay TV providers.
Netflix's monthly “churn” rate -- the percentage of existing subscribers leaving the service -- was a low 2.5% for the fourth quarter of 2020 in the U.S, according to Antenna and MoffettNathanson Research analysis.
Beyond Netflix, premium streamers churn rate ranges from Disney+ at 4.3% to Apple TV+ at 15.6%. Among other platforms, Peacock is at 9.5%, followed by Showtime OTT at 8.8%; Starz OTT, 8.4%; HBO Max, 6.7%; CBS All Access (now Paramount+), 5.9%; and Hulu, 5.2%.
While a higher churn rate can be a growing issue, analysts says the ease of canceling a streaming service has been a positive contributor to the OTT business -- versus legacy pay TV providers. Churn rate is calculated from the number of existing customers departing the service, while growth rate is the addition of new customers added over a specific period.
Premium streamers can experience more volatile, alternating high and low churn rates, due to consumers “cherry picking” programs and content as they come and go on platforms.
By way of comparison, average monthly basic cable network monthly TV churn has been between 1.5% and 2.5%. Looking at one specific long-time pay TV provider, Dish Network, it had a 1.4% churn rate in the fourth quarter of 2020. Since 2017, it has had only a high of 2.11% in the third quarter of 2018.
MoffettNathanson says: “Basic cable network programmers experience very modest overall levels of monthly churn as their economics are tied to the broader churn dynamics of the bundle.”
Absolutely right, Wayne. The newer SVOD/AVOD services make it very easy to cancel as a way to capture newbie subs on a "no risk" basis---to the sub. But that phase will soon end and discounts will be offered for firm one- and two-year subscriptions, making it less likely for people just to sample a service , then drop out anytime they choose. At the same time this tougher stance will be a major problem for "me too" services with little new or original to offer---and there are many of them flooding the marketplace. Inevitably many will fail----or be absorbed by the biggies.