Do Free Trials Lead to Long-Term Subscriptions?
Do Free Trials Lead to Long-Term Subscriptions?
New data from Antenna shows that customers who sign up for a streamer at full price are more likely to stay subscribed in the long term.
Free is the right price! That’s the philosophy many customers adopt when a streaming service offers a free trial. Prime Video and Hulu are the two services that stand out most with their free trials, as both streamers offer 30-day free viewing periods to allow customers to give their platforms a thorough test. Paramount+ often gives viewers a 30-day trial with use of a special promo code as well, but many viewers think of a trial period as a good way to watch a specific title on a service, then cancel that service before they end up having to pay.
Antenna’s “State of Subscriptions” report shows how likely free trial and promotional price subscribers are to convert to long-term customers, which has particular implications for Max as it experiments with a free trial to allow viewers to watch a new season of “House of the Dragon,” and for Peacock with its current $19.99 annual plan promotion.
Key Details:
- The share of full-price subscribers to streamers has not dipped below 56% or risen above 65% at any point in the past two years.
- The average customer lifetime value (CLTV) of a full-price subscriber is more than $20 higher than that of a free trial subscriber.
- Full price sign-ups were much more likely to stay subscribed to a streamer for 12 months.
The saturation of the U.S. streaming marketplace has led to a slowing in new net streaming subscriptions, there are still some customers who have never signed up for some streamers. Antenna’s “State of Subscriptions” report breaks down the three ways that customers can sign up for a streamer, then examines how long each cohort remains subscribed to their chosen service.
The first method of subscription is full price. In the first quarter of 2024, 65% of streaming sign-ups were in this category, meaning customers did not use a promotional price or a free trial to access a new streaming service. That number has fluctuated somewhat between 2022 and 2024, but it has never fallen below 56%, nor has it ever risen above its current rate. This suggests that the number of services offering a free trial in that time has remained more or less consistent. Most promotional price signups happen in the fourth quarter each year, pointing to Black Friday and other holiday-related discounts as the main reason for the spikes.
Related: 225+ Streaming Services You Can Try for Free ►
Which Subscriber Type Stays Signed Up Longest?
Antenna’s report also examines which type of streaming customers are most likely to remain engaged for the long term. The research clearly shows that viewers who sign up at full price are the most likely to stay subscribed for 12 months or more. The churn rate among customers who stay subscribed to a streamer for a year or longer plummets by more than half, so creating customers with this kind of loyalty is crucially important for streaming operators.
The biggest drop-off for full-price subscribers come after month one, after which Antenna observed 28% canceled their subscription. Assuming the service in question had a monthly price of $10, the full-price subscriber cohort was worth $68.17 in customer lifetime value on average, and 35% of full-price customers stayed subscribed to the streamer in month 12.
Related: 75+ Streaming Services With Annual Discounts - How to Save Big on Your Bill ►
Promotional period sign-ups retained the second-largest number of subscribers after 12 months, with 30% remaining with the service after that time. Seventy-three percent of viewers who signed up with a promotional price converted to full-price customers, which is good news for Peacock as it offers a full year's subscription for just $19.99 ahead of the 2024 Summer Olympics. CLTV for promo price customers comes to $50.68 on average, much lower than that of the full-price group.
Both full-price subscribers and promo subscribers stay with streamers longer and are worth more to providers in the long term than free trial signups are, however. Antenna found that only 67% of free trialers convert to full-price customers, and that 12 months after they sign up, only 24% remain with the streamer in question. Free trial customers only produce a lifetime value of $48.09 on average in that 12-month span, a full $20 less than the full-price cohort.
This last piece of data could mean that Max won’t see many of the customers who sign up with its current free trial offer remain subscribed for the long haul. Max is allowing new customers to sign up with a seven-day free trial for a limited time, as it prepares to roll out a new season of the hit series “House of the Dragon” on Sunday, June 16. The free trial may help Max set an audience record and grab some headlines with the Season 2 premiere, but Antenna’s numbers show that any customers who subscribe to the service with the trial offer are more likely than not to cancel their subscription soon after.
The data could also mean that any future streaming bundles or new standalone services that launch may decide to skip the trial process and force customers to pay full price when they subscribe. This policy is decidedly not consumer friendly, but it is the best way for streamers to create more high-quality subscribers going forward, at least according to Antenna’s numbers.
Max
Max is a subscription video streaming service that gives access to the full HBO library, along with exclusive Max Originals. There are hubs for content from TLC, HGTV, Food Network, Discovery, TCM, Cartoon Network, Travel Channel, ID, and more. Watch hit series like “The Last of Us,” “House of the Dragon,” “Succession,” “Curb Your Enthusiasm,” and more. Thanks to the B/R Sports add-on, users can watch NBA, MLB, NHL, March Madness, and NASCAR events.