Parks Associates Charts Strong OTT Trial Conversion Rates

Some 40 percent of U.S. broadband homes used a free trial of at least one OTT service amid the pandemic, per Parks Associates, with almost 70 percent of those signing up for a subscription.

“The use of free trials, promotional offers and bundled packages has accelerated through the first part of 2020, during the initial stage of the COVID crisis,” said Steve Nason, research director at Parks Associates. “The conversion of those trials to paid subscriptions has also increased, but to keep those subscribers long term, providers need to deliver a continually evolving and personalized experience. Taking in and leveraging the data gained from viewer habits and actions offer OTT video service providers an opportunity like never before to engage subscribers through every phase of their journey with their services.”

The Parks Associates whitepaper, Improving OTT Customer Engagement with Smart Data, also reveals that U.S. broadband homes spent an average of $16 per month on OTT video subscriptions in Q1 of this year.

Per Parks Associates, the churn rate for OTT services fell to 38 percent in Q3 of this year from 46 percent in the same period in 2019. Virtual MVPDs experienced an even more dramatic drop, from 84 percent in 2019 to 49 percent in 2020.

“Households across the U.S. continue to be primarily homebound or more homebound than they have been in prior ‘normal times,’” said Nason. “They have much more time and opportunity to engage and interact with OTT services and are deciding to stick with services, including midsized and smaller ones, longer than normal. Consequently, we are seeing a lower overall churn rate for OTT services.”

The churn rates for the so-called “Big 3″—Netflix, Amazon Prime Video and Hulu—are “considerably” lower than the average SVOD platform, Parks reports. Disney+’s churn rate is at 13 percent, and HBO Max, Apple TV+ and Peacock have churn rates at around 20 percent.

“Companies that effectively integrate smart data are leading the battle to engage the ever-elusive digital media and entertainment consumer,” Nason said. “The overall OTT churn rate has dipped some, but if the economic impacts from COVID-19 pandemic linger, households will continue to scrutinize their spending in entertainment services and determine which ones to keep and which ones to cancel. Smart data usage can give an advantage to a provider in keeping their service at the top of a household’s entertainment equation.”