OTT is booming globally, but issues remain

Nearly a third of all consumers in six key world markets are planning to take an SVOD subscription but, according to a new report, 50% of new subscribers will cancel their subscriptions within six months.

The report, from subscription, billing and CRM specialist Paywizard, also says about one-in-eight existing SVOD subscribers will take an additional pay-TV subscription.

Paywizard said cloud TV services are surging in popularity, with the percentage of consumers subscribing nearly doubling over the past year to 45% from 25% 12 months earlier.

The global survey, conducted with Research Now, covers the United States, the United Kingdom, Germany, Brazil, Australia and Singapore.

The projected surge in OTT uptake is taking place as 59% of the 6,242 consumers surveyed plan to watch more TV overall this festive season. The study said that the holiday bump means new subscriber figures (18%) added to those for existing customers (45%) would take the total percentage of subscribers to 63% after Christmas. However, the findings also reveal that 50% of those planning to take an OTT service for the first time this holiday season intend to cancel their subscription within six months.

“There are definitely huge opportunities for OTT players to build on the momentum paid video-on-demand services are showing across all markets,” said Bhavesh Vaghela, Paywizard’s CMO. “Nonetheless it is clear that subscribers view these services as an activity they can dip in and out of. Keeping customers loyal is the major challenge facing providers. As OTT adoption nears the 60% range, operators need to address every point of the customer journey and work harder to keep new and old subscribers alike.”

While Amazon Prime Instant Video and Netflix are driving pay- OTT growth, the trend is also creating opportunities for local operators, as native challenger brands such as Foxtel Play in Australia, Maxdome in Germany and Now TV in the UK show strong potential – with 32%, 22%, and 19% respectively of first-time subscribers planning to sign up to these services this Christmas.

“Incumbency is no guarantee of future success and challenger brands remain on the rise,” said Vaghela. “There is still enormous potential for new and local OTT players to carve their own niche and attract both first-time and multi-service subscribers. The findings make clear that in pay-TV, there is still everything to play for.”

While Millennials (52%) remain most likely to already have a cloud TV service, other demographics are catching up with 47% of 35-44-year-olds now having a pay-OTT service, compared to just 27% last year, and subscriptions among 45-54s increasing to 42% from 25% a year ago. Millennials also are 3X more likely than 55+ consumers to add a service this year.

Nearly two-thirds (63%) of consumers listed cost as one of the top three reasons they’d give up a cloud TV service; “not much too watch” was the next most popular answer (42%), “bad customer experience” (35%) was nearly as prevalent a reason and nearly as many list “provider does not seem to care about what I want and so doesn’t cater to my needs” (30%)

The message? Pay more attention to your customer, said Vaghela.

“Providers need to look beyond their content offering and use data-based insights to engage subscribers at the right time, with packages that meet their needs, while providing a positive overall customer experience,” he said.

Stay tuned.

Jim O’Neill is Editor of Videomind and Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn