Survey Says: OTT Churn Rate at All-Time High
Learn more about live OTT and churn at Streaming Media East 2022.
Read the complete transcript of this clip:
Paul Erickson: I thought it would help frame today's discussion by first taking a focused look at the OTT market environment within which niche services are operating today, based on Parks Associates survey data of 10,000 U.S. Broadband households. And so right now, 80% of U.S. broadband households have at least one OTT subscription and nearly half--49%--have four or more subscriptions. And so competition is at an all-time high, but subscription growth has been slowing down, and consumers are facing subscription overload. They have a finite amount of time and budget to spend on streaming, particularly as they spend less time at home in this post-pandemic environment. Consumers are getting more intentional and more discriminating in what services are going to be in that stack of must-subscribe services every month. And also, the inherent ease of leaving and switching OTT services has churn at an all-time high: 45% in Q3 2021, which is up from only 40% at the same time the prior year in 2020.
And so finding ways to keep subscribers engaged and retaining them are as important as ever. And one overarching need felt by a lot of today's consumers is for simplicity. Consumers want to decrease the amount of multiplicity and complication. And one way they're doing so is by leaning into the chances to take advantage of variety, and some iterations of which are delivered via bundling and aggregation. And so to explain this second chart here, you see on the right, in this slide, viewers dedicate an average of 70% of their viewing to services with a broad variety of content. And over one-third of viewers dedicate over three-fourths of their time to services with varied content. And so the big three OTT services and their closest competitors leverage this by featuring a variety of content across genres. Now niche services can also leverage the same effect most frequently via bundling deals that deliver a varied combination of content to consumers, or by being included in an aggregatiom platform, an MVPD, or FAST service that is similarly delivering a package variety.
And so the takeaway there is having access to variety matters to consumers, whether that's coming via their creation of their own bundle or that's coming via an aggregation or MVPD or FAST service. And so increasingly consumers are creating their own bundles, as I said. One thing to notice is the super aggregation that's increasingly the norm in the latest user experiences--for example, Google TV, the latest iterations of Samsung Tizen, LG webOS, and several others. It brings the content-first experience to the consumer, and it attempts to bring together that self-bundling proposition into a less fragmented, unified experience, or that's the hopeful goal. And so the need to dive in and out of individual apps, such as going to a niche content app, is going to decrease. And so super-aggregation's hopeful goal, in principle, is to democratize personalization and discovery at the UX level, and niche services potentially can benefit.
How much have recent inflationary pressures been driving OTT SVOD churn in combination with an increase in FAST services, and what are the best possible approaches to meeting new consumer streaming needs in this present economy?
Paul Erickson of Parks Associates talks about the ways that OTT platforms can reduce their churn rates during this unique time period of content overload and inflationary pressures
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