Nearly a Third of Streaming Service Trials Result in a Paid Subscription

New study reveals consumers are buying into OTT

The average household spends $7.95 a month for streaming services.
iStock

New research shows 32 percent of free trials for streaming services end in a subscription.

That’s good news for Hulu and YouTube as they launched skinny bundle streaming services in the last month, which followed the launch of DirecTV Now late last year.

“Free OTT trials are effective in converting a sizeable portion of trial users into subscribers,” said senior analyst Glenn Hower of Parks Associates, which conducted the study. Hower admits that while there is a potential for “free trial abuse” only about 1 percent of consumers are “serial trialers” who abuse free trials to avoid paying for services.

Prices range from $5.99 per month for CBS All Access to $50 a month for DirecTV Now’s skinny bundle, which includes some 80 networks.

“Most consumers use trials for their intended purpose of trying out a service before deciding whether or not to continue as a paid subscriber,” he said.

More than a quarter of U.S. broadband households signed up for a free trial of at least one OTT service in the past six months, Parks found. Those range from Netflix to Amazon Prime and HBO Now to Showtime. Of those users, Parks found that 47 percent subscribed to at least one trial service after the free period expired.

Average monthly spending on streaming subscriptions reached $7.95 per U.S. broadband household in 2016. Hower said most households build their services around at least one of the top three services: Netflix, Amazon and Hulu.

“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,” Hower predicts.