Parks Associates reports the churn rate for over-the-top [OTT ]services increased from 35% in quarter one of 2019 to 41% in quarter one of 2020. During the COVID-19 crisis, more than two in five US broadband households have trialed an OTT service, and 8% of households have trialed four or more services, according to the research group.
OTT is a streaming media service offered directly to viewers over the Internet. Examples include Apple TV+, Netflix, Amazon, Prime, Disney +, and Hulu.
“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,” says Steve Nason, research director, Parks Associates. “OTT services are offering extended free trials to build up engagement, and 8% of US broadband households report they have subscribed to at least one new OTT service since the COVID-19 crisis began.”
Among these new subscribers, 49% subscribed to Disney+ and 27% subscribed to Apple TV+, so conditions created by the crisis helped these services quickly increase their subscriber base, he adds. The question going forward is whether subscribers will keep these services as fewer households shelter-in-place. A significant challenge, especially for services relying on original programming, is delivering new content since production on many series has halted.
“The industry is working on new hybrid content strategies as a result of production halts,” Nason says. “Major players like AT&T for Warner Brothers and Comcast for Universal Studios are greatly concerned about the delays in content production on the launches of new services, like HBO Max and Peacock. Free trials will bring in new subscribers at the launch, and roughly seven in ten 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.”
