Netflix ‘churn rate 9%’

Roughly 4% of US broadband homes have cancelled their Netflix subscription in the past 12 months, representing almost 9% of the OTT service’s subscriber base, according to Parks Associates.

The research firm’s OTT Video Market Tracker noted high churn rates for many subscription video services, including Hulu.

Some 7% of US broadband homes cancelled their Hulu Plus subscription in the past year, amounting to roughly 50% of the service’s subscriber base, according to the research.

Among the smaller online video services – not run by Netflix, Amazon or Hulu – some 60% of those who currently subscribe to these cancelled one or more of the services over the past year, said Parks.

“We are tracking the details and trends of over 75 OTT video services active in the US market along with another dozen or so services planning to enter the market within the next few months,” said Parks Associates research director Brett Sappington.

“The high churn rate for many of these services suggests that consumers are holding onto their Netflix account while experimenting with the wide variety of other video subscription options.”

“To shed a number of subscribers equal to half or more of your current subscriber base is a huge problem. Customer acquisition costs for an OTT subscription service are relatively low, particularly compared to pay TV, but OTT video services will eventually have to capture and retain their customer bases over time in order to survive in the long term.”

Parks Associates estimates that 85% of US broadband households subscribe to a pay TV service, while 59% access an OTT video subscription. Of those who use OTT video, just under 50% use two or more services.