OTT Churn Rates Pass 50% but TV Execs Tout OTT Bundles as Pay-TV Subs Wane

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ADDISON, TEXAS – Over-the-top (OTT) services are now experiencing churn rates that surpass 50 percent of their subscriber base, with the exception of Netflix and Amazon Prime, reports Parks Associates.

The researcher adds that more than 50 percent of U.S. OTT homes subscribe to multiple OTT video services. Of these multi-OTT households, 81 percent use Netflix plus some other service or combination of services – mostly Amazon or Hulu.

Other numbers of note include:

  • 30 percent of TV homes subscribing to one subscription service use at least one free, ad-supported online video service, with 47 percent of homes subscribing to three subscription services and 63 percent of households subscribing to five or more services.
  • 69 percent of U.S. broadband households subscribe to at least one OTT video service as of third-quarter 2017.
  • More than 50 percent of U.S. broadband households that use OTT services subscribe to multiple OTT video services. That number was 20 percent in 2014
  • OTT now has 51 million TV viewing households.

Parks Associates conducted an online survey in the third quarter of this year – a total of 10,017 heads-of-households with a home broadband service.

Meanwhile, many TV executives continue to tout so-called “skinny bundles” of content as a way to keep their subscription businesses going, while TV viewing increasingly goes over-the-top.

21st Century Fox Executive Chairman Lachlan Murdoch, speaking last week at Business Insider’s Ignition conference, said bundles such as YouTube TV and Hulu Live now have hundreds of thousands of subscribers, although it's still in the “very early days” for these types of services. 

“As the traditional cable business is declining, absolutely there are subscriber revenue losses that are being ameliorated by these new bundles,” Murdoch said. “But here’s the key: You have to be on those [streaming] packages, and those packages are only valuable if they are cheaper than the current loaded cable bundle. So to be in that core bundle, you need to have core channels that people want.”

Murdoch suggested that his company’s investment in the Fox broadcast network, Fox News, and FX is about ensuring those brands will be “must-haves” for these new skinnier bundles, such as YouTube TV.

Viacom CEO Bob Bakish mirrored Murdoch’s comments. “We have to not only maximize our share of the margins in the traditional business, but also accelerate our participation of next-generation platforms and solutions,” Bakish said. “Consumers have more choices than ever at more price points than ever, and these flagship brands need to be represented across them.”

Bakish said Viacom’s core brands would be represented across traditional pay-TV packages, but needed to be present – even if in a light capacity – in these skinnier streaming packages.

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