New ‘Record’ Rates During A Lockdown Through Video Streaming Services

(Photo by Mark Von Holden/Invision/AP)

A new study has excellent news and bad news for the proliferating group of subscription video-on-demand services, especially the large new ones backed by major media companies. On the one hand, consumers are attempting Disney+, Apple TV+ et al. at a high rate. On the opposite, they’re also cancelling SVOD services at a high rate too, churning through services as they struggle on new competitors.

Research firm Parks Associates released the study today, saying it showed consumers are experimenting with a spread of streaming services while idled by the Covid-19 lockdown. the general churn rate of these services, i.e., what number customers have cancelled subscriptions, jumped in Q1 2020 to 41 percent, up six percentage points from the identical quarter in 2019.

“We are seeing a record number of consumers experiment with new OTT services as a results of the COVID-19 crisis and also the shifts in strategy within the industry,” Parks Associates director of research Steve Nason told Deadline. “OTT services are offering extended free trials to make up engagement, and eight percent of U.S. broadband households report they need subscribed to a minimum of one new OTT service since the COVID-19 crisis began.”

Nearly half those new subscribers tried out Disney+, which says it now has over 54 million customers because it continues to expand into new territories round the globe.

Apple TV+ pulled in a couple of quarter of the new subscribers, 27 percent, in line with Parks. the corporate hasn’t detailed its subscriber base since the Nov. 1 launch, but other studies suggest it's over 30 million subscribers. Most of these are receiving the subscription free for a year after purchasing an iPhone, iPad or Mac from Apple, the studies suggest.

Now comes the subsequent tranche of subscription services: HBO Max, Peacock, and however ViacomCBS beefs up CBS All Access with other assets.

HBO Max stumbled out of the gate, with few original shows and widespread consumer confusion over how it differentiated from the HBO premium pay-TV channel and existing apps HBO Go and HBO Now. As well, the new app hasn’t been available on Amazon AMZN or Roku video platforms, which together reach about 80 million U.S. homes.

Peacock faces its own challenges persuading consumers to do it out. One big attraction, enhanced Olympics news and programming, went along the wayside when the games were delayed a year. Now, the service will go wide July 15 after a quiet April debut on Comcast-owned services.

For the latecomers, enticing consumers who already are subscribing to many other services won’t be easy. It could get even worse this month, as unemployment benefits run out for a lot of Americans who is also feeling financially strapped during the lockdown and recession.

The services are counting on free trials, bundles, and other deals to encourage sampling, though after its strong start, Disney+ has cancelled its one-week trial offer previous this week’s debut of the movie version of Broadway hit Hamilton.

And as challenging as getting new consumers to undertake out a service may be, even as important are going to be retaining consumers after they’ve signed up, Nason said. Given the sparse arrays of latest originals controlled by the newcomers, retaining subscribers are going to be a slog. But if ever there’s a time to demonstrate value, it’s now.

“Free trials will herald new subscribers at the launch, and roughly seven in 10 have subscribed to a minimum of one OTT service they need trialed,” Nason said. “OTT services have to be creative in building a fascinating service, but during this point of heavy video consumption, OTT services have the chance like never before to persuade new video consumers and retain them as long-term subscribers.”