Almost 1 in 5 Households Cancelled OTT in the Past Year
Recently, Parks Associates announced the churn rate of OTT providers is roughly 19% of U.S. households, meaning almost one in five households have canceled an OTT service in the past year.
“The churn rate has held steady, with one-in-five broadband households canceling an OTT video service in the past year,” said Brett Sappington, Senior Director of Research, Parks Associates, on their website. “These are not free trials but instances where consumers are spending real money to try out new OTT services. One-third of households that currently subscribe to an OTT video service have canceled one or more services in the past year, which shows that there is quite a bit of experimentation occurring right now.”
The Parks Associates OTT Video Market Tracker service also found that households with OTT subscription increased their spending from an average of $3.75 per month to almost $8.00 in 2016. During the same period, spending on physical media and rentals declined by over 50%.
The OTT Video Market Tracker service provides deeply insightful research data of competing services’ strengths and weaknesses. The service also includes extensive analysis of OTT market trends and profiles over 100 OTT providers in the U.S. and Canada.
While all of that is good news for media companies, retention will be the key to future success. Today the OTT market is fragmented, and many consumers are experimenting with different services.
Parks Associates also noted that churn was lowest among the top three services (Amazon, Hulu, and Netflix). These three providers are competing by racing to add more original content to their consumer offerings. All three, for example, now offer their subscribers the option of downloading videos to watch offline.
“These services have worked to establish core customer bases, and the inertia of those primary groups provides an important baseline of ongoing revenues,” Sappington said on Park Associate’s website. “They continue to refine or add to their offerings so that subscribers will continue to see new value in the service, providing ongoing reasons to remain a customer.”