New Parks Associates’ research finds 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 quarter three of 2019 to 38% in the third quarter of 2020.
As a subset of subscription-based OTT services, vMVPDs experienced an even more dramatic drop, from 84% in 2019 to 49% in 2020. An over-the-top is a streaming media service offered directly to viewers via the Internet. OTT (over-the-top) services bypasses cable, broadcast, and satellite television platforms. vMVPDs (Virtual Multichannel Video Programming Distributors) are online pay-TV services that offer bundles of live channels.
The churn rate, also known as the rate of attrition or customer churn, is the rate at which customers stop doing business with an entity. It is most commonly expressed as the percentage of service subscribers who discontinue their subscriptions within a given time period
“Households across the U.S.continue to be primarily homebound or more homebound than they have been in prior ‘normal times,’ ” says 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.”
Parks Associates finds the key challengers to the Big 3 (Netflix, Amazon Prime Video, and Hulu) are experiencing churn rates considerably lower than the overall average for all OTT services. For example, Netflix’s churn rate is around 3$.
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 are a direct beneficiary of the move away from traditional pay-TV services,” Nason says. “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.”