SVOD Churn Hitting Some Big Providers
A new survey from Juniper Research has found that some of the biggest names in Subscription Video on Demand (SVOD) are dropping customers at a surprising rate. The survey, released earlier this month, found that churn rates for such video streaming services as Amazon Prime and HBO Now are increasing.
What is churn?
Churn is the number of subscribers who drop a subscription in a given time period. The severity of churn for a content provider depends on a ratio of how much the provider spends in acquiring subscribers—advertising, low introductory rates, etc.—relative to the number of subscribers they lose. SVODs normally don’t require contracts, so customers are able to dip into then jump out of them at will, when they don’t meet their expectations.
Juniper found that Amazon Prime experienced a -2.9 percent churn rate in such key markets as the U.S. and United Kingdom. The research service reported a -19.2 percent churn rate for HBO Now across these same markets. On the other hand, Netflix experienced a positive adoption rate of 6.3 percent in the U.S. and a 7.7 percent gain in the UK.
Part of the problem seems to be the proliferation of subscriptions, with the average person worldwide having three active subscriptions at any given time. The firm also found that non-contract viewers tend to cancel when they don’t receive enough content, or receive content that they tend to judge as subpar. Like the proverbial vicious circle, SVODs then pay more to obtain better content, passing the cost along to subscribers, who then begin to question the overall value of their subscription and move toward cancellation.
“The use of multiple subscriptions suggests that no one provider offers enough to currently satisfy consumers,” said Juniper research author Lauren Foye in a statement. “Juniper finds a growing danger in users reducing, or switching SVOD subscriptions, as monthly fees inevitably rise as a result of ever-increasing content spend. Netflix alone is set to spend $13 billion this year.”
Broadcast TV lives
For those who’ve been predicting the demise of broadcast television, the Juniper survey indicated otherwise. To help retain customers, Juniper recommended collaboration between over-the-top (OTT—that is, TV delivered via the Internet rather than through traditional satellite or cable) services and more traditional providers. It offered the example of Sky hosting Netflix content on its Q platform.
In addition, the research firm pointed to the lingering value of broadcast. It noted that while 40 percent of its UK respondents reported that they streamed live sports events, only six percent of those watch sports solely through online channels. Their main viewing of sports continues to be through broadcast television. Juniper urged a synergy between broadcast and online outlets to compete successfully with stand-alone OTTs.
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