OTT Subscription Churn Rate Steady at 18%: Parks

About 18% of U.S. broadband households canceled a over-the-top video service, a rate that has held steady over the past three years, according to research from Parks Associates.

OTT video subscriptions are relatively new compared to traditional pay-TV and while they are growing quickly, data about churn rates is still emerging.

Parks says that the average subscription length for OTT video services is 30 months, with the top services, Netflix, Amazon Prime and Hulu, having more stability.

Churn is important because video service spend a lot to add subscribers and holding onto these mostly young consumers pays off financially.

"With OTT service penetration starting to plateau at around 65% adoption among U.S. broadband households, the OTT video market is reaching a level of saturation for the services currently available to consumers," said Hunter Sappington, a research analyst at Parks Associates. "In an increasingly crowded and competitive marketplace where subscriber acquisition costs are high, this plateau highlights the need for services to focus on retention rather than solely acquisition. Successful services can encourage retention in several ways, such as community building, continuously offering new and fresh content, and improving their user experience."

Parks says that more than 85% of U.S. millennials currently subscribe to at least one OTT video service.

The firm estimates that by 2022, more than 265 million households worldwide will have more than 400 million OTT video service subscriptions.

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