With the figure equating to 8%, most cancellations resulted from sports programming cancellations. Churn rates have declined to 38% from 46% last year among OTT video services and vMVPDs dropped from 84% in 2019 to just under 50%.
A new research report released by Parks Associates indicates that the overall annual churn rate for OTT services, representing those subscribers who have cancelled a service as a percentage of the current subscriber base, dropped from 46% in 3Q 2019 to 38% in 3Q 2020. As a subset of subscription-based OTT services, vMVPDs experienced an even more dramatic drop, from 84% in 2019 to 49% in 2020. “Households across the US continue to be primarily homebound or more homebound than they have been in prior ‘normal times,’” said Steve Nason, Research Director, Parks Associates. “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 firm also found that, as of May 2020, 8% of US broadband households cancelled at least one video service due to the COVID-19 crisis, including 4% of that cancelled a traditional pay-TV service, due in large part to the cancellation of sports programming. “The lack of sports programming had a significant role in households cancelling their pay-TV services early in the pandemic,” said Jennifer Kent, Senior Director, Parks Associates. “All major leagues have now resumed play, and that should bring back many of these households, especially online pay-TV subscribers, who have an easier path to re-subscribe compared to traditional pay TV.”
The research firm also reports more than 40% of former pay-TV subscribers said they would re-subscribe once sports resumed, while more than two-thirds of former online pay-TV subscribers would sign back on. “The ongoing economic crisis could push additional households to trim services,” Nason said. “Service and video providers are shifting to focus on retention and finding ways to keep subscribers through innovative partnerships and unique content.”
The top three streamers, Netflix, Amazon Prime Video, and Hulu, have seen lower than usual averges for churn rates. Disney+’s churn rate is at 13%, and HBO Max, Apple TV+, and Peacock have churn rates at around 20%. For vMVPDs, their churn rates are still high, but COVID-19 has accelerated the migration away from traditional pay-TV services via a cable or satellite provider while also encouraging extended subscriptions. “vMVPDs, online pay-TV services that offer bundles of live channels, are a direct beneficiary of the move away from traditional pay-TV services,” Nason said. “This trend, along with the return of live sports, is a huge growth accelerant for vMVPDs such as YouTube TV, Hulu with Live TV, and fuboTV. As a result, the churn rate for vMVPDs, while still hovering near 50%, has been significantly reduced in this latest release.”
Households across the US continue to be primarily homebound or more homebound than they have been in prior ‘normal times. 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.” Steve Nason Research Director, Parks Associates