Churn rate drops for U.S. OTT services especially vMVPDs

Parks Associates: Churn Rate Drops to 38% Among OTT Services and 49% Among vMVPDs

DALLAS — New Parks Associates research finds the overall annual churn rate for OTT services, representing those subscribers who have cancelled a service as a percentage of the current subscriber base, dropped from 46% in 3Q 2019 to 38% in 3Q 2020. As a subset of subscription-based OTT services, vMVPDs experienced an even more dramatic drop, from 84% in 2019 to 49% in 2020.

“Households across the US continue to be primarily homebound or more homebound than they have been in prior ‘normal times,'” said Steve Nason, Research Director, Parks Associates. “They have much more time and opportunity to engage and interact with OTT services and are deciding to stick with services, including midsized and smaller ones, longer than normal. Consequently, we are seeing a lower overall churn rate for OTT services.”

Parks Associates finds the key challengers to the Big 3 (Netflix, Amazon Prime Video, and Hulu) are experiencing churn rates considerably lower than the overall average for all OTT services. Disney+’s churn rate is at 13%, and HBO Max, Apple TV+, and Peacock have churn rates at around 20%. For vMVPDs, their churn rates are still high, but COVID-19 has accelerated the migration away from traditional pay-TV services via a cable or satellite provider while also encouraging extended subscriptions.

“vMVPDs, online pay-TV services that offer bundles of live channels, are a direct beneficiary of the move away from traditional pay-TV services,” Nason said. “This trend, along with the return of live sports, is a huge growth accelerant for vMVPDs such as YouTube TV, Hulu with Live TV, and fuboTV. As a result, the churn rate for vMVPDs, while still hovering near 50%, has been significantly reduced in this latest release.”