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Subscribers Churning Through Video Streaming Services At ‘Record’ Rates During Lockdown

A new study has good news and bad news for the proliferating group of subscription video-on-demand services, especially the big new ones backed by major media companies. On the one hand, consumers are trying Disney+, Apple TV+ and others at a high rate. On the other, they’re also cancelling SVOD services at a high rate too, churning through services as they try on new competitors.

Research firm Parks Associates released the study today, saying it showed consumers are experimenting with a variety of streaming services while idled by the Covid-19 lockdown. The overall churn rate of those services, i.e., how many customers have cancelled subscriptions, jumped in Q1 2020 to 41 percent, up six percentage points from the same quarter in 2019.

“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,” Parks Associates Research Director Steve Nason told Deadline. “OTT services are offering extended free trials to build up engagement, and 8 percent of U.S. broadband households report they have subscribed to at least one new OTT service since the COVID-19 crisis began.”

Nearly half those new subscribers tried out Disney+, which says it now has more than 54 million customers as it continues to expand into new territories around the globe.

Apple TV+ pulled in about a quarter of the new subscribers, 27 percent, according to Parks. The company hasn’t detailed its subscriber base since the Nov. 1 launch, but other studies suggest it has more than 30 million subscribers. Most of those are receiving the subscription for free for a year after purchasing an iPhone, iPad or Mac from Apple, the studies suggest.

Now comes the next tranche of subscription services: HBO Max, Peacock, and however ViacomCBS beefs up CBS All Access with other assets.

HBO Max stumbled out of the gate, with few original shows and widespread consumer confusion over how it differentiated from the HBO premium pay-TV channel and existing apps HBO Go and HBO Now. As well, the new app hasn’t been available on Amazon or Roku video platforms, which together reach about 80 million U.S. homes.

Peacock faces its own challenges persuading consumers to try it out. One big attraction, enhanced Olympics news and programming, went by the wayside when the games were delayed a year. Now, the service will go wide July 15 after a quiet April debut on Comcast-owned services.

For the latecomers, enticing consumers who already are subscribing to several other services won’t be easy. It could get even worse this month, as unemployment benefits run out for millions of Americans who may be feeling financially strapped during the lockdown and recession.

The services have been relying on free trials, bundles, and other deals to encourage sampling, though after its strong start, Disney+ has cancelled its one-week trial offer ahead of this week’s debut of the movie version of Broadway hit Hamilton.

And as challenging as getting new consumers to try out a service can be, just as important will be retaining consumers after they’ve signed up, Nason said. Given the sparse arrays of new originals controlled by the newcomers, retaining subscribers will be a slog. But if ever there’s a time to demonstrate value, it’s now.

“Free trials will bring in new subscribers at the launch, and roughly seven in 10 have subscribed to at least one OTT service they have trialed,” Nason said. “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.”

From the article "Subscribers Churning Through Video Streaming Services At ‘Record’ Rates During Lockdown" by David Bloom.

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