As more and more services enter the streaming landscape, it is becoming increasingly difficult for services to retain their subscribers. While the practice of “churn and return,” which sees customers leave a service only to return when specific content becomes available, is on the rise amongst many different consumers, one segment of the streaming environment seems to have gotten the problem under control.
According to a recent report from research firm Parks Associates, services that stream television channels via the internet — known as virtual multichannel video programming distributors (vMVPDs) — have achieved a record low churn rate of just 36%, a decline of 48% over the past two years.
The top vMVPDs like Hulu Live TV, YouTube TV, Sling TV, Philo, DIRECTV STREAM, and fuboTV experienced significant growth in the early days of the pandemic, while plateauing and even taking a small step backward recently. While there are seasonal ebbs and flows for all live TV streaming services — especially in the early months of the year after the football season ends — this section of the streaming space has become far more stable since early 2020.
The churn rate for vMVPD services hit a peak of 84% in the third quarter of 2019 as consumers were still adjusting to the expansion of live TV streamers. As services launched and attempted to gain a foothold in the market, they offered substantial free trials and discounts that eventually expired leading to customer turnover.
“Consumers have settled into the adoption of a virtual multi-channel video-on-demand service as a lower-cost alternative to traditional pay television,” the Parks Associates report states.
To date, 19% of homes with broadband access report using a vMVPD in place of a traditional cable or satellite pay-TV service provider. At the start of the year, more than 14 million Americans were subscribed to a live TV streamer and while Hulu, Sling, and fubo TV all reported quarterly declines in their last earnings updates (while some competing services did not provide updates at all), the space remains a large, growing corner of the streaming landscape.
In addition to the annual post-football timing of these most recent reports, increased prices are also believed to be an issue for vMVPDs, but as a whole, the vMVPD market saw more than half a million new subscribers in the first quarter of the year, while traditional pay-TV subscriptions fell by 825,000 customers during the same time period.