nScreenMedia OTT multiscreen media analysis

50% of SVOD subs plan to quit by July 2016

Number of people signing up for Netflix Dec 15

UK based Paywizard says this holiday season will be a banner one for SVOD providers, but the glow will not last. As many as half of subscribers will cancel their subscription within the first 6 months of 2016.

In November 2015 Paywizard commissioned an online survey of 5960 consumers in Australia, Brazil, Germany, Singapore, the UK and US. The online survey found that 50% of consumers will use OTT SVOD services this holiday season. 25% already have a subscription to an SVOD service, with a further 27% planning to subscribe over the holidays.

Netflix looms large, according to Paywizard. 24% of US consumers say they will sign-up for the SVOD leader in December, and 44% of Brazilian say the same. Europe seems somewhat cooler to Netflix with 13% of the British saying they will sign-up, 11% of Austrians, and just 8% of Germans.

Paywizard’s survey indicates that Netflix, Amazon and the other SVOD providers should hold off on popping the champagne. The company claims a third of existing subscribers and 56% of new subscribers will cancel their subscription within 6 months. One of the biggest reasons people are anticipating cancelling is the wide availability of free trial periods. The company says 21% of those planning to subscribe say they will binge during the free trial and cancel soon afterwards.

Paywizard goes on to say there is hope for SVOD. 54% said they could be persuaded to stay if there was enough fresh rich content.

Percentage of people planning to sub to SVOD Dec 15This could be why Netflix is planning to double the amount of original content it creates next year. In 2015, it created 16 new original shows. That will nearly double in 2016 to 31, according to Ted Sarandos, head of content for Netflix. In addition, the company has in production 10 feature films, 30 children’s shows, “about a dozen” documentaries, two documentary series, and 10 stand-up comedy specials.

Although Netflix is pulling back from signing deals with US movie studios, 2016 will see the debut of a raft of Disney content on the service. According to Netflix spokesman Jonathan Friedland, this will make Netflix the “exclusive US subscription television service” for Disney’s new releases. These films stem from a deal the company did with Disney 3 years ago.  It already has available many popular Disney movies such as Hercules, Dumbo, and Mulan.

Netflix is not alone in trying to find a content mix to retain subscribers. Amazon is not only looking to original content creation; it’s also seeking to coopt other SVOD service. In the US, the company launched its “Streaming Partners Program”, which aggregates other SVOD providers into a store of sorts. Some 20 partners, including Showtime, Lifetime Movie Club, and AMC’s Shudder, are all available through Amazon.  Starz is also available through the program, marking the first time the cable channel has been available without a pay TV subscription.

SVOD providers are well aware of consumer proclivities to sign up for a free month of service over the holidays. In fact, they are betting on it. While consumers may have the intention of bingeing for a month and then cancelling, the OTT service providers are sure they can persuade a substantial number of them stick around much longer than they originally planned.

Why it matters

The holidays are normally a boon for SVOD providers, as consumers have the time and the inclination to try out new services.

Nearly half of SVOD users have the intention of quitting the service within the first 6 months of 2016.

SVOD providers are bringing more rich content, betting they can persuade many subscribers to stay longer than they had planned.

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