Today’s viewers consume video content across a range of content types and business models, gravitating toward online streaming services instead of traditional cable and satellite to meet their entertainment needs. Parks Associates’ data as of Q1 2022 finds that US internet households subscribe to an average of five OTT services. Among OTT subscribers only, the number of services jumps to an average of six – more than double the average in 2019. As a result, traditional pay TV companies are joining the 300+ direct-to-consumer streaming services already present in the US market alone.
Consumers fully embrace service stacking and bundling to cope with the overwhelming number of options available, but the no-contract model for OTT services makes it just as easy for consumers to cancel a service as it does to subscribe. The average subscription duration for established services (e.g., Netflix) is 33 months while newer services tend to have shorter subscriptions. Services with a loyal fan base such as Disney+, AppleTV+, and Crunchyroll have a subscription duration of over 12 months.
As consumers experiment with various services and refine their stack, churn rates increase. Parks Associates measures churn as the percentage of households that report canceling a video service in the prior 12 months. The streaming video subscriber churn rate is 48%, reflecting a rising rate since 2018 when it was just 28%. In contrast, the churn rate for virtual multichannel video programing distributor (vMVPD) subscribers is 31%, a decreasing rate since 2019 indicative of increasing traction for the linear experience among consumers.
This unprecedented increase in entertainment consumption is simultaneously generating vast amounts of valuable data. As a result, many providers are going beyond the traditional big data-based analytics and turning to AI and ML-based systems to fully understand their customer base, their performance, and potential. AI- and ML-enabled data equip video services with relevant, actionable, and prescriptive insights to guide decision-making processes.
Consumers today are aware of the diversity of options available and are increasingly more comfortable going outside of the more popular streaming services - Netflix, Amazon Prime Video, Disney+, Hulu, HBO Max, Paramount+, Peacock - to satisfy their content demands; only 27% of households exclusively subscribe to these 7 services.
This is an excerpt from Parks Associates new white paper, Engaging Next-Gen Video Viewers: Leveraging AI and ML, released in partnership with FPT Software. This whitepaper addresses the increased consumer use of video services and content preferences, discovery challenges, and the role of bundles shaping the market now and in the future. It also shows how streaming businesses can use artificial intelligence (AI) and machine learning (ML) to drive engagement and monetization.
Parks Associates is bringing together entertainment leaders, including executives from Amazon, LG Electronics, Paramount Streaming, and VIZIO, for the fifth annual Future of Video: OTT, Pay TV, and Digital Media, December 12-14, at the Marina del Rey Marriott in California.
Future of Video: OTT, Pay TV, and Digital Media bring together senior leaders to share insights on new trends in the video and connected entertainment industries, with insights on consumer adoption, churn, and spending. The event provides insight into successful OTT strategy deployments, challenges for pay-TV providers, the role of connected CE in the growth of video viewing, new content formats, and the overall impact to the video market.
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