Streamers Dilemma: Keeping Cord Cutters Who Drop Services After Free Trials
A problem that long plagued premium cable TV — subscribers canceling when a favorite series ended its season’s run — is also part of the streaming world.
Disney+ has done well in its first month, largely due to the popularity of “The Mandalorian,” released weekly to build an audience. (The “Star Wars” universe drama ends Dec. 27.)
Free trials are part of the streamers’ promotional lure. Apple TV+ is free to anyone who purchases a new device. Verizon is offering a free year of Disney+ to 17 million higher-end phone/Internet customers. Bundles are also in the mix — Disney+-ESPN+-Hulu or (CBS All Access-Showtime) — are priced low to attract viewers.
But Recurly, which provides billing assistance to the industry, reports such services have some of the highest cancellation rates among subscription-based businesses, Bloomberg Businessweek noted.
“Only about a third of customers stick around after free trials run out,” according to the Bloomberg Businessweek story, and “roughly 10% of members quit video streaming services monthly — twice the rate for games, music, and other entertainment.”
Other analysts wonder if customers will pay for future subscriptions after getting a service for free. Companies have to get creative — adding inventory and/or being nimble about viewing trends.
Disney told customers to subscribe to Hulu’s $55-a-month live TV package during football season — then switch to a cheaper no-sports plan in the offseason, Bloomberg Businessweek pointed out. DAZN, a sports streamer, dropped free trials in 2018 and doubled the subscription price, but added a season of boxing matches.
Bloomberg Businessweek quotes Richard Broughton, research director at Ampere Analysis, a media consulting firm, on Disney’s status when the Verizon deal expires: “There will be a wave of cancellations unless Disney drops a number of new series.”