Study: Netflix Has Lowest Churn Rate Among OTT Services


DALLAS: About one-fifth of U.S. broadband homes canceled at least one of their OTT video services in the last year, though Netflix had the lowest churn rate, according to Parks Associates.

In the last 12 months, 20 percent of U.S. broadband homes had canceled, and in Q2 2015, just 18 percent had done so.

Netflix is still the OTT leader in the U.S., with 52 percent of all U.S. broadband households subscribing to the service at the end of 2015. Netflix also had the lowest churn rate as a percentage of its total subscriber base. In the past 12 months, 5 percent of U.S. broadband households canceled their Netflix account, including those who canceled at the end of the trial period. That figure represents 9 percent of the company’s current subscriber base.

Around 5 percent of U.S. broadband households indicated that they had unsubscribed from Amazon’s Prime Video service in 2015, a figure that represents 19 percent of those who claim to be current subscribers to Amazon Prime Video. Also, 24 percent of U.S. broadband households report having a subscription to Amazon so that they can stream video. The churn rate for Amazon’s video service declined slightly from Q2 2015 to the end of the year.

Meanwhile, 7 percent of U.S. broadband households canceled a Hulu subscription in 2015, representing approximately half of Hulu’s current subscriber base—roughly the same churn rate from Q2 2015. Parks Associates reports that 14 percent of U.S. broadband households subscribe to Hulu.

Brett Sappington, senior director of research at Parks Associates, said: “Several factors contribute to OTT video service churn by consumers. In some instances, consumers are experimenting with new services, trying a service and canceling before the trial period ends or within a few months. Popular shows or events, such as HBO’s Game of Thrones or WWE Network’s Wrestlemania, can be beneficial in terms of attracting users. However, there is a risk that consumers will unsubscribe once they’ve watched these popular items. Ongoing perceived value, in the long run, is the biggest driver to churn. Services have to continue to provide users with validation of value and a reason to return. Otherwise, consumers will discontinue services to save money or because they feel that the subscription is not worth the cost.”

“On a service-by-service basis, the smaller OTT video services have relatively high churn, particularly relative to Netflix and Amazon,” Sappington continued. “Reasons for cancellation vary by service, but there are some common trends. Cancelers of OTT services with linear features (such as Sling TV, CBS All Access, and PlayStation Vue) are more likely to subscribe with the intent to terminate the subscription after watching specific content. They are also more likely to be critical of a service’s interface than those who cancel VOD-only OTT video services.”