OTT Churn 9x Higher Than Pay TV, Parks Says
In an increasingly competitive SVOD market in which consumers can cancel subscriptions at any time, and sign right back up again, churn is an issue
While video consumers are increasingly dissonant go truck rolls and the two-year contract, there’s something to be said about the relative stickiness of traditional pay TV.
According to Parks Associates, churn rates for OTT services like Netflix and Disney+ are actually around nine times higher than they are for traditional linear TV platforms. And churn for subscription video on demand (SVOD) services is about 1 1/2 times greater than it is for virtual pay TV services like Sling TV, Hulu Live TV and YouTube TV.
As more consumers enter the SVOD market, and more services start competing with it, OTT service churn is increasing—from a rate of just under 30% at the beginning of 2018 to about 35% in the first quarter of 2019.
Speaking at Parks Associates’ “Future of Video” conference last week in the Los Angeles area, Marty Roberts, co-founder CEO of consultancy Wicket Labs, said OTT services that offer consumers the chance to sign up and quit instantaneously, and without penalty, must market effectively.
To combat churn, Roberts advises his OTT service clients to look for at-risk subscribers—those who have been inactive for a three-month period, say—and find ways to get them engaged.
Interestingly, however, he tells his clients to tread quietly around users who might have forgot they’re paying a monthly bill for video service.
“There’s causal relationship between inactive customers and churn after six months,” Roberts said. “The worst thing you can do is talk to those customers.”
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Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!