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SVODs are hot, but subscribers are still fickle

A Parks Associates study finds that US customers are still experimenting with SVODs, even as Netflix, Amazon and Hulu reign supreme.
April 25, 2016

A new study from Dallas-based research firm Parks Associates has found that 20% of US broadband households (approximately 90 million homes) cancelled at least one OTT or SVOD subscription in 2015.

This doesn’t necessarily mean that subscriptions are waning—64% of households surveyed had an SVOD subscription at the end of 2015, up from 59% in 2014. But findings suggest that customers are still shopping around and experimenting with SVODs, particularly niche services like Japanese anime service Crunchyroll.

So how do the major players stack up?

As expected, Netflix still leads in terms of subscriptions. Roughly 50% of US broadband households were subscribed to the SVOD in December 2015, and just 5% of households had cancelled Netflix in the past 12 months. This figure includes those who cancelled at the end of Netflix’s free one-month trial, which accounted for 9% of its US subscriber base.

OTT Parks

Competitor Amazon, to which 24% of respondents were signed up, saw a 19% subscription drop in 2015. This could be attributed to Amazon’s subscription model which, until last week, was only available as an add-on to the company’s US$99 annual Prime service offering. Earlier this month, Amazon announced that it will unbundle the VOD service from Prime, allowing users to subscribe for US$8.99 per month.

This unbundling move could prove beneficial to the service, as most of those surveyed in the Parks study said they subscribed to Prime mainly for the video features.

Meanwhile, Hulu ended 2015 with 14% of US households subscribed, and 7% of broadband subscribers dropped the SVOD at some point during the year.

All three SVODs have begun to differentiate themselves from one another in terms of content and strategy. Netflix has by far the largest slate of originals, with 600 hours that have either already premiered or are set to bow in 2016. It’s also the most aggressive in terms of international expansion, streaming in 190 countries to Amazon’s five. Hulu is still US-only.

Netflix has also moved increasingly towards exclusivity deals…plenty of which are of the kid-centric variety…resulting in the loss of a large slate of movies from distributor Epix.

Amazon, which for its part has been rapidly beefing up its children’s original offerings, has the largest overall content library of the three competing SVODs, with more than 20,000 titles. A recent report by Business Insider found that Amazon carried more than 18,000 film titles, compared to Hulu’s 6,000 and Netflix’s 4,000.

Hulu has just recently started shelling out big dollars for the direct acquisition of content windows. It recently bought the exclusive rights to favorites like Curious George and AwesomenessTV’s Freakish.

In terms of niche SVOD services, which continue to launch in throngs, the Parks study suggests that there may be retention challenges ahead.

In total, the study found that there were 101 SVOD and OTT services available in the US as of March 2016 (with 33 being added in the past year alone). But removing Netflix, Amazon and Hulu from the equation leaves only 5% of US broadband households subscribed to one or more of the 98 remaining options. And 3% of the total households surveyed cancelled their subscriptions to one of these “other” services last year.

The study also suggested that many people only sign up for services to follow popular, tentpole programming, such as a premiere or a finale of a popular show. And those who cancelled their subscription to smaller OTT services were often critical of the service’s interfaces, discoverability and features.

 

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