March 19, 2019
Online video subscribers in the United States average 3.4 streaming services and pay an average of $8.53 per month per service, according to a new study.
The nScreenMedia study, “Keep My Customer — Why Consumers Subscribe To, Stay With, Cancel, and Come Back to Online Video Services,” also found that 70% of households in the United States and 40% of U.K. homes have a subscription to at least one streaming video service.
The study was commissioned by Vindicia, an Amdocs company providing business-to-consumer digital services monetization.
Involuntary cancellation is a problem for the industry, according to the study. These payment failures occur when a credit card problem, such as insufficient funds, results in automatic cancellation of a customer. The study revealed that more than a quarter of U.S. and a third of U.K. online video streamers have had a SVOD service canceled due to a credit card problem. And of those groups, 30% did not return to the service.
“Involuntary cancellations are a huge problem for the SVOD industry, particularly among young subscribers,” said study author Colin Dixon, founder and chief analyst at nScreenMedia, in a statement. “Young adults from 18 to 34 years old are twice as likely to have experienced involuntary cancellation in the U.K., and three times more likely in the U.S.”
“For video streaming services, the ability to acquire and retain subscribers is vital to their success,” said Anthony Goonetilleke, group president, media, network and technology, Amdocs, in a statement. “However, streaming services are losing subscribers — and millions of dollars in annual revenue — due to involuntary credit card cancellations. This kind of customer churn is largely preventable. By leveraging the right technology, video streaming providers can recover failed payment transactions and capture revenue that would otherwise be lost, enabling them to better compete in a highly competitive market.”
In terms of overall cancellations, the survey looked at how often people cancel their service and their reasons for doing so. In the United States, 38% of the survey group said they have canceled one or more services in the last year. Of that group, two-thirds said they had canceled one service only, and just one in 10 have canceled three or more services.
Netflix users are slightly less likely than average to have canceled service in the last year, according to the study, while Hulu users are slightly more likely. Amazon Prime Video users are no more or less likely than average.
The top two reasons cited for canceling a video service: people couldn’t find enough content they liked and didn’t find the service a good value for their money.
Previous customers are the best new prospects, as the study found that 33% of U.S. and 25% of U.K. cancellers have been persuaded to sign up for service again.
Discounted subscriptions are an under-exploited opportunity for service providers to win new customers. The survey revealed that a 20% discount for a three-month commitment generated the highest interest level, with 66% of U.S. and 57% of U.K. subscribers saying they were likely or extremely likely to take the offer. Three months is an important milestone, because subscribers that stay this long are much less likely to leave the service. Surprisingly, the study found that offering more than a 20% discount did not result in more interest.
The study also found that free-trial abuse is not a serious problem for online video service providers. While 49% of U.S. and 62% of U.K. online video subscribers have canceled at least one service within the free trial period, only 5% in the U.S. and 2% in the U.K. have canceled within the free-trial period four or more times in the last year.
When it comes to retaining existing subscribers, content is king. The study found that 64% of U.S. subscribers and 55% of U.K. subscribers have been with their longest-tenured service for one year or more. When asked why they stay, respondents said having plenty of interesting content to watch was the top reason. Value for money was a close second place, and ease of finding something good to watch came in third. Interesting original content was the fourth reason, while providing plenty of new shows took the fifth-place spot.
Meanwhile, Amazon’s expanding influence in the VOD market is evident. The study found that one-third of U.K. and U.S. Prime Video subscribers have purchased an add-on video service, with higher income individuals more likely to use Amazon Prime Video and to purchase an add-on. In the United States, the most popular video add-ons are premium services such as HBO, Starz, Showtime and Cinemax. CBS All Access is also very popular. In the United Kingdom, the most popular video add-ons are Eurosport Player, Discovery, ITV Hub+ and FilmBox.
To learn more about the nScreenMedia study or to download a copy, visit here.