New Research Shows We’re Now at Peak OTT

According to new research from market research and consulting company Parks Associates, the OTT space presents unique challenges for the dozens of providers in the U.S., ranging from Netflix to Showtime. The research suggests that OTT users, despite the plethora of options, have found the interfaces they enjoy most and use them for long periods of time.

Here’s what else the study revealed:

OTT growth is peaking

Though the percentage of people who have said they subscribe to one or more OTT services has increased since 2013, the percentage of respondents who said they did has hovered at a little more than 60 percent for the past three years.

“Growth is slowing, and the market is reaching the point of saturation,” said Hunter Sappington, research analyst at Parks Associates. “Companies are forced to consider how do we keep the subscribers we have instead of grow subscription numbers?”

But, as Sappington noted, “it’s not all doom and gloom,” and most consumers have nearly two OTT services.

Average subscription for OTT video services lasts 30 months

Consumers are still experimenting with paid TV services, but once they’re happy with a service, they tend to keep it. OTT churn and cancel rates have remained somewhat consistently at or about 18 percent for the past four years.

“Many consumers are settling into the services they subscribe to,” Sappington said. “The experimentation period is starting to end for most consumers.”

There’s still a lot to experiment with; in 2018, there are more than 220 OTT video services.

There’s a high churn rate for most OTT services 

Showtime had the highest churn rate, which means bringing in consumers before they leave, among providers, according to the analysis, and Netflix had the lowest.

Showtime’s churn rate was more than 95 percent, while Netflix had a rate of less than 10 percent, according to the research.

Price increases, lack of new content or changes to the service could cause a viewer to turn away, Sappington said.

“We expect for the churn rates for these services to decrease over time as consumers become more familiar with them,” Sappington said.

Price and value are reasons people leave services

The most popular reasons people said they were planning on cancelling their OTT service were to save money (about 30 percent) and that the service was not worth paying for at the price it was (about 25 percent).

Sappington said creating a community around the service or creating incentives are possible ways to increase retention. Incentives could include partnerships with other streaming services, such as the package the music provider Spotify offers to students in conjunction with Hulu and Showtime.

“For the smallest OTT communities, it’s really important that they’re laser focused on meeting the needs of subscribers,” Sappington said.

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