Study: SVOD subs churn at faster rate than pay-TV customers

While SVOD platforms like Netflix (NASDAQ: NFLX), Hulu and Amazon Prime Instant Video have been lauded for easy, immediate customer sign-up processes, the fact that exiting these services is just as convenient results in churn that is significantly higher than what is found in pay-TV.

"SVOD households generally churn at a higher rate than multi-channel video programming distributor (cable TV) households," wrote BMO Capital Markets analyst Daniel Salmon. "We expect this is in part due to SVOD services' generally non-restrictive cancellation policies."

Culling Nielsen data, BMO Capital found that, surveying over a three-month span, 99 percent of cable customers still had their service in place after a 90-day period. But 5 percent to 7 percent of SVOD users had ditched their streaming service. 

Of course, understanding the dynamic of customer interaction with SVOD service providers is crucial to a pay-TV industry that is now forced to grapple with these platforms in order to keep subscriber bases intact. 

According to Nielsen, 41 percent of U.S. households now subscribe to a streaming service, up from 36 percent in just one year. 

Meanwhile, 10 percent of persons age 18-34 use only OTT programming services. 

For more:
- read this Investor's Business Daily story

Related articles:
Will SVOD make programming networks like HGTV, NBC and AMC obsolete?
Survey: 67% of Netflix users also subscribe to pay-TV; 9% of those to cut the cord
HBO Now may have over 850K subscribers, analyst says

Suggested Articles

Comcast is defending its civil rights and diversity record as it prepares for a U.S. Supreme Court showdown with Entertainment Studios over a $20 billion…

Comcast Spotlight, the advertising sales division of Comcast Cable, has hired Melanie Hamilton as vice president of national sales.

The big four U.S. wireless carriers don't practice their video throttling uniformly.