Parks Associates Announces Update to OTT Subscriber Churn Rates for Netflix, Hulu, and Amazon Users

DALLAS, TX--(Marketwired - Apr 14, 2016) - In advance of the NAB Show next week, Parks Associates announced OTT data today showing that at the end of 2015, approximately 20% of U.S. broadband households had cancelled at least one OTT video service in the past 12 months. In 2Q 2015, 18% had done so.

Brett Sappington, Senior Director of Research, Parks Associates, will present the new data at the NAB Show next week in his session "Adoption, Churn, and the Risky Lives of OTT Video Services," as part of the Online Video Conference program on April 18 in Room N249 of the Las Vegas Convention Center.

Netflix is still the OTT leader in the U.S., with 52% of all U.S. broadband households subscribing to the service at the end of 2015. Netflix also had the lowest churn rate as a percentage of its total subscriber base. In the past 12 months, 5% of U.S. broadband households cancelled their Netflix account, including those who cancelled at the end of the trial period. That figure represents 9% of the company's current subscriber base. Five percent of U.S. broadband households indicated that they had unsubscribed from Amazon's Prime Video service in 2015, a figure that represents 19% of those who claim to be current subscribers to Amazon Prime Video. Seven percent of U.S. broadband households canceled a Hulu subscription in 2015, representing approximately half of Hulu's current subscriber base.

Research from Parks Associates' OTT Video Market Tracker shows:

• 5% of U.S. broadband households cancelled Netflix in 2015, up from 4% of households reporting in 2Q 2015 that they cancelled the service in the past 12 months.
• 14% of U.S. broadband households subscribe to Hulu, and 7% of U.S. broadband households cancelled the service in 2015, roughly the same churn rate from Q2 2015.
• 24% of U.S. broadband households report having a subscription to Amazon so that they can stream video. The churn rate for Amazon's video service declined slightly from Q2 2015 to the end of the year.
• There were 101 OTT video services available in the U.S. market as of March 2016. Only 5% of U.S. broadband households have a subscription to one or more of the 98 options beyond Netflix, Amazon, and Hulu. This list includes CBS All Access, Sling TV, HBO Now, and Crunchyroll. Three percent of U.S. broadband households cancelled a subscription to an OTT video service other than one of the top three in the last 12 months.

"Several factors contribute to OTT video service churn by consumers. In some instances, consumers are experimenting with new services, trying a service and cancelling before the trial period ends or within a few months. Popular shows or events, such as HBO's Game of Thrones or WWE Network's Wrestlemania, can be beneficial in terms of attracting users. However, there is a risk that consumers will unsubscribe once they've watched these popular items," Sappington said. "Ongoing perceived value, in the long run, is the biggest driver to churn. Services have to continue to provide users with validation of value and a reason to return. Otherwise, consumers will discontinue services to save money or because they feel that the subscription is not worth the cost."

Parks Associates'  OTT Video Market Tracker shows 33 new OTT services entering the U.S. market in 2015. Among all U.S. broadband households, 64% of U.S. broadband households subscribe to an OTT video service, up from 59% in 2015.

"On a service by service basis, the smaller OTT video services have relatively high churn, particularly relative to Netflix and Amazon," Sappington said. "Reasons for cancellation vary by service, but there are some common trends. Cancellers of OTT services with linear features (such as Sling TV, CBS All Access, and PlayStation Vue) are more likely to subscribe with the intent to terminate the subscription after watching specific content. They are also more likely to be critical of a service's interface than those who cancel VOD-only OTT video services."

Parks Associates will address the OTT market in multiple sessions at the 20^th-annual CONNECTIONS™: The Premier Connected Home Conference, May 24-26, at the Hyatt Regency San Francisco Airport. Executives from Amazon, Comcast Cable and Vivint Smart Home will deliver keynotes, and sessions feature consumer research and market strategies for the consumer IoT, including the smart home, entertainment and CE, tech support, and mobile and digital content ecosystems.

For more information about the OTT Video Market Tracker, CONNECTIONS™, and related research, contact sales@parksassociates.com. To schedule an interview with Brett at the NAB Show, please contact Holly Sprague at hsprague@gmail.com.

About Parks Associates
Parks Associates is an internationally recognized market research and consulting company specializing in emerging consumer technology products and services. Founded in 1986, Parks Associates creates research capital for companies ranging from Fortune 500 to small start-ups through market reports, primary studies, consumer research, custom research, workshops, executive conferences, and annual service subscriptions.

The company's expertise includes digital media and platforms, entertainment and gaming, home networks, Internet and television services, digital health, mobile applications and services, support services, consumer apps, advanced advertising, consumer electronics, energy management, and home control systems and security.

Each year, Parks Associates hosts industry webcasts, the CONNECTIONS™ Conference Series, Connected Health Summit: Engaging Consumers, and Smart Energy Summit: Engaging the Consumer. http://www.parksassociates.com