New Study Reveals the Average Online Video Subscriber in the U.S. Subscribes to 3.4 Streaming Services and Pays an Average of $8.53 Per Service
Mar 19, 2019
Third-party commissioned research shows discounted offerings are an under-exploited opportunity for service providers—but involuntary customer cancellations are a huge industry problem.
Hulu subscribers more likely to cancel than Netflix subscribers.
San Mateo, Calif. ― March 19, 2019 — Vindicia, an Amdocs company (NASDAQ: DOX) and a leader in business-to-consumer digital services monetization, today released a study it commissioned from nScreenMedia that delves into consumer relationships with streaming video services and viewing behaviors. The study, “Keep My Customer” – Why Consumers Subscribe To, Stay With, Cancel, and Come Back to Online Video Services, found that 70% of households in the U.S. and 40% of U.K. homes have a subscription to at least one streaming video service, and that the average subscriber in the U.S. watches 3.4 services and pays an average of $8.53 per service.
One of the study’s major findings is that involuntary cancellation is a serious problem for the industry. These payment failures occur when a credit card problem, such as insufficient funds, results in automatic cancellation of a customer. The study revealed that over a quarter of U.S. and a third of U.K. online video streamers have had a subscription video on demand (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. “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. “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 intelligent 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.”
Cancellers can be persuaded to come back
In terms of overall cancellations, the survey looked at how often people cancel their service and their reasons for doing so. In the U.S., 38% of the survey group say they have canceled one or more services in the last year. Of that group, two-thirds say they had canceled one service only, and just one-in-ten have canceled three or more services.
Netflix users are slightly less likely than average to have canceled service in the last year. Hulu users are slightly more likely. And 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 good value for their money.
The good news for service providers is that old customers are their best new prospects. They study found that 33% of U.S. and 25% of U.K. cancellers have been persuaded to sign up for service again.
Discounts are a prime opportunity
It is no secret that video streaming is a hyper-competitive market. Another important finding is that 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 to reach, 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.
Free trials not being abused
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 UK have canceled within the free-trial period four or more times in the last year.
Content is still king
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.
Amazon’s expanding influence
Amazon’s expanding influence in the VOD market is evident. The study found that one-third of UK 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 U.S., the most popular video add-ons are premium services like HBO, Starz, Showtime, and Cinemax. CBS All Access is also very popular. In the UK, 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.
Vindicia, an Amdocs company, offers comprehensive subscription management solutions that help businesses acquire and retain more customers. Providing much more than just a billing and payments system, the company’s SaaS-based subscription management platform combines big data analysis, strategic consulting and proprietary retention technology. Vindicia provides its clients with more recurring revenue, more customer data, better insights, and greater value throughout the entire subscriber lifecycle. That’s why they call us the Subscription People. To learn more visit www.vindicia.com.
Amdocs is a leading software and services provider to communications and media companies of all sizes, accelerating the industry’s dynamic and continuous digital transformation. With a rich set of innovative solutions, long-term business relationships with 350 communications and media providers, and technology and distribution ties to 600 content creators, Amdocs delivers business improvements to drive growth. Amdocs and its 25,000 employees serve customers in over 85 countries. Listed on the NASDAQ Global Select Market, Amdocs had revenue of $4.0 billion in fiscal 2018. For more information, visit Amdocs at www.amdocs.com.
Amdocs’ Forward-Looking Statement
This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including statements about Amdocs’ growth and business results in future quarters. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material. Such statements involve risks and uncertainties that may cause future results to differ from those anticipated. These risks include, but are not limited to, the effects of general economic conditions, Amdocs’ ability to grow in the business markets that it serves, Amdocs’ ability to successfully integrate acquired businesses, adverse effects of market competition, rapid technological shifts that may render the Company's products and services obsolete, potential loss of a major customer, our ability to develop long-term relationships with our customers, and risks associated with operating businesses in the international market. Amdocs may elect to update these forward-looking statements at some point in the future; however, the Company specifically disclaims any obligation to do so. These and other risks are discussed at greater length in the Company's filings with the Securities and Exchange Commission, including in our Annual Report on Form 20-F for the fiscal year ended September 30, 2018 filed on December 10, 2018 and our quarterly 6-K form furnished on February 19, 2019.