Streaming Subscribers Have Itchy Trigger Fingers During COVID-19, With Churn Rate Rising To 41% – Report

Dade Hayes
·4 min read

Click here to read the full article.

UPDATED at 3pm PT with additional detail on individual churn patterns. The overall “churn” rate, reflecting how many customers cancel their subscriptions to streaming services, rose to 41% during the first quarter of 2020 from 35% in the same period of 2019.

Research firm Parks Associates revealed the statistic Monday, describing it as a gauge of consumers experimenting with streaming during COVID-19 shutdowns. The past few months have also seen the launch of several new streaming services, including Disney+, Apple TV+ and HBO Max. Peacock, which initially debuted in the Comcast footprint, will launch nationally on July 15.

More from Deadline

“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 at 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.”

Among those new subscribers, 49% subscribed to Disney+ and 27% subscribed to Apple TV+, the firm determined.

Nason’s report didn’t break out individual services in terms of churn rate. In response to emailed questions from Deadline, he wrote, “In general, large foundational services such as Netflix, Amazon Prime Video, and Hulu have lower churn rates.” Those major services, which have all operated for more than a decade “form the base of an OTT video consumer’s service stack and are typically deemed more essential.”

Internet delivered TV bundles like Sling TV, YouTubeTV and Hulu with Live TV, on the other hand, “experience much higher churn rates because of their higher cost and general uniformity across providers combined with the lack of service contracts and termination fees typical of all OTT services,” Nason added. “All services, during this time of unprecedented consumption, have to be vigilant about delivering an all-encompassing user experience that exceeds consumer expectations in order to retain subscribers and reduce churn.”

The newest entrants in the streaming derby, notably the traditional media companies, face particularly stiff challenges during the pandemic. They need to acquire customers directly — a relatively new process in the larger context of third-party distribution via pay-TV — and they also need to retain them.

Netflix, the longtime leader in streaming, has built a competitive advantage with sheer volume, releasing more than 700 original titles a year. COVID-19 has shut down production across the industry, as well as wiping out theatrical film distribution for months. Netflix has been able to maintain a steady pace of new releases. Disney+, a comparatively light offering in terms of new originals, has had to scramble and program titles like Hamilton, originally slated for a theatrical bow in fall 2021, for this summer on Disney+. HBO Max came to market May 27 without the Friends reunion special initially designated as its marquee launch title.

“The industry is working on new hybrid content strategies as a result of production halts,” Nason said. “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. 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.”

Disney’s free trial for Disney+ has just expired, meaning new subscribers will need to pay $7 a month. It has gotten off to a fast start, however, reporting 54.5 million global subscribers through early May. HBO Max is still offering free trials, as is Apple TV+, with the latter also included for a year free for anyone buying an Apple device.

Nason will expound on his report in an online presentation Tuesday at the StreamTV Summer Research Summit, presented by Fierce Video.

Best of Deadline

Sign up for Deadline's Newsletter. For the latest news, follow us on Facebook, Twitter, and Instagram.