32% of free OTT trials result in a paid subscription

Parks Associates: 32% of Free OTT Trials Result in a Paid Subscription

DALLAS — Nearly one-third of OTT free trials convert to a paid subscription, according to new connected entertainment research from Parks Associates. The research firm, which produces the industry-leading resource OTT Video Market Tracker, announced today that Senior Analyst Glenn Hower will be speaking on the session “OTT Video Services: Fighting to Capture and Retain Users” at NAB Show Las Vegas on Monday, April 24, at 12:10 p.m.

Hower will discuss the firm’s latest consumer and OTT research, including new findings on the use of free trials among OTT services. Services such as Hulu and Netflix often offer a period of free service to new subscribers, with the aim to convert as many new subscribers into paying customers.

“Free OTT trials are effective in converting a sizeable portion of trial users into subscribers,” Hower said. “There is a potential for free trial abuse, but only roughly 1% of consumers are ‘serial trialers’ who abuse free trials to avoid paying for services. Most consumers use trials for their intended purpose of trying out a service before deciding whether or not to continue as a paid subscriber.”

More than one-fourth of U.S. broadband households trialed at least one OTT service in the previous six months. Of these users, 47% subscribed to at least one trial service after the free period expired.

“While spending on transactional services has declined, average monthly spending on subscription OTT video has increased, reaching $7.95 per U.S. broadband household in 2016. Most households build their services around at least one of the top three services, Netflix, Amazon, and Hulu, which also show among the most effective trial conversion rates,” Hower said. “Since there isn’t much money left for niche OTT services, these services should not expect to expand beyond their particular audience niche and may also have to implement tiered services or hybrid business models to diversify their subscriber bases and generate incremental revenue wherever possible.”

Parks Associates is supporting NAB Show Las Vegas, April 22-27. Hower’s session “OTT Video Services: Fighting to Capture and Retain Users” will explore the trends and dynamics of today’s OTT market and reveal new data on adoption and churn.

Parks Associates and other industry leaders will address the evolving OTT landscape at the 21st-annual CONNECTIONS™: The Premier Connected Home Conference, May 23-25 in San Francisco, California.