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OTT Service Churn Rate Hit 41% in Q1, Parks Says

(Image credit: roku)

The average industry churn rate for OTT services in the first quarter rose to 41% vs. 35% in the first quarter of 2019, according to a new report published by research company Parks Associates.

The churn rate reflects the amount of subscribers cancelling service as a percentage of the overall customer base. Parks Associates is, not surprisingly, tying the uptick to COVID-19 era viewing patterns—not only is streaming video consumption up, the research company says, but users are experimenting more than ever with new OTT services, and these services are offering more promotional options for customers to conduct these dalliances. 

“We are seeing a record number of consumers experiment with new OTT services as a result of the COVID-19 crisis and the shifts in strategy in the industry,” said Steve Nason, Research Director, Parks Associates. “OTT services are offering extended free trials to build up engagement, and 8% of U.S. broadband households report they have subscribed to at least one new OTT service since the COVID-19 crisis began.”

Disney Plus has grabbed nearly half of these new subscriptions (49%), Parks said, with another 27% going to Apple TV Plus. 

Nason pondered if the new SVOD services entering the market in the second quarter, AT&T’s HBO Max and Comcast’s Peacock, will have similar success, given that pandemic-related studio shutdowns have limited their ability to produce original content. 

“The industry is working on new hybrid content strategies as a result of production halts,” Nason said. “Major players like AT&T for Warner Brothers and Comcast for Universal Studios are greatly concerned about the delays in content production on the launches of new services, like HBO Max and Peacock. Free trials will bring in new subscribers at the launch, and roughly seven in ten have subscribed to at least one OTT service they have trialed. OTT services need to be creative in building an engaging service, but during this time of heavy video consumption, OTT services have the opportunity like never before to win over new video consumers and retain them as long-term subscribers.”