Free trials are everywhere from live TV services such as Sling TV to Netflix and Amazon. It turns out that most free trials never turn into a paid subscription.
According to a report from Parks Associates nearly one-third of OTT free trials convert to a paid subscription, according to new connected entertainment research from Parks Associates.
“Free OTT trials are effective in converting a sizeable portion of trial users into subscribers,” Hower said. “There is a potential for free trial abuse, but only roughly 1% of consumers are ‘serial trialers’ who abuse free trials to avoid paying for services. Most consumers use trials for their intended purpose of trying out a service before deciding whether or not to continue as a paid subscriber.”
What is even more interesting is that more than one-fourth of U.S. broadband households tried at least one OTT service in the previous six months. Of these users, 47% subscribed to at least one service after the free period expired.
“While spending on transactional services has declined, average monthly spending on subscription OTT video has increased, reaching $7.95 per U.S. broadband household in 2016. Most households build their services around at least one of the top three services, Netflix, Amazon, and Hulu, which also show among the most effective trial conversion rates,” Hower said. “Since there isn’t much money left for niche OTT services, these services should not expect to expand beyond their particular audience niche and may also have to implement tiered services or hybrid business models to diversify their subscriber bases and generate incremental revenue wherever possible.”
There are hundreds of subscription video services streamed online. Maybe it should be no surprise that most free trials do not end in subscriptions. Netflix, Amazon, and Hulu have the best conversation rates, which shows how the quality of the service is important. In a world of options cord cutters will naturally drift to the best services on the market. Gone are the days where no matter how bad the service was Americans had no other option.
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