OTT Services Show High Churn Rates, Finds Parks Associates

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Churn rates for over-the-top video services are high, says market research company Parks Associates. This shows that U.S. households are experimenting with their options, Parks concludes.

According to Parks research, 4 percent of U.S. broadband households have cancelled their Netflix service in the last 12 months, a figure that represents almost 9 percent of the subscription video-on-demand (SVOD) leader's subscriber base. For Hulu, 7 percent have cancelled, representing almost half of its subscriber base. Smaller OTT services have even higher churn rates.

SVOD options are new to U.S. households, so viewers are testing the waters, says Glenn Hower, a Parks research analyst. Since these services are low-cost, viewers can afford to experiment and learn which ones best suit their interests.

Parks reports that 85 percent of U.S. broadband-enabled households subscribe to a pay TV service, and 59 percent use an OTT video service. Of the OTT users, slightly under half access two or more services.

The rise of original OTT content could be another reason for the high churn rate. Hower notes that subscribers might quickly watch the content that interests them most on a service, then cancel. Since accessing services is easy, subscribers might sign up for Amazon Prime or HBO Now to watch a buzzed-about show, then drop the service when they've finished it. Viewers are keeping their Netflix accounts and experimenting with secondary subscriptions, Parks finds.

The data comes from Parks Associates' OTT Video Market Tracker service.

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