netflix Stranger Things

A New Study Looks at How Effective Free Trials Are at Acquiring New Subscribers


Free trials are everywhere from live TV services such as Sling TV to Netflix and Amazon. It turns out that most free trials never turn into a paid subscription.

According to a report from Parks Associates nearly one-third of OTT free trials convert to a paid subscription, according to new connected entertainment research from Parks Associates.

“Free OTT trials are effective in converting a sizeable portion of trial users into subscribers,” Hower said. “There is a potential for free trial abuse, but only roughly 1% of consumers are ‘serial trialers’ who abuse free trials to avoid paying for services. Most consumers use trials for their intended purpose of trying out a service before deciding whether or not to continue as a paid subscriber.”

What is even more interesting is that more than one-fourth of U.S. broadband households tried at least one OTT service in the previous six months. Of these users, 47% subscribed to at least one service after the free period expired.

“While spending on transactional services has declined, average monthly spending on subscription OTT video has increased, reaching $7.95 per U.S. broadband household in 2016. Most households build their services around at least one of the top three services, Netflix, Amazon, and Hulu, which also show among the most effective trial conversion rates,” Hower said. “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 and generate incremental revenue wherever possible.”

There are hundreds of subscription video services streamed online. Maybe it should be no surprise that most free trials do not end in subscriptions. Netflix, Amazon, and Hulu have the best conversation rates, which shows how the quality of the service is important. In a world of options cord cutters will naturally drift to the best services on the market. Gone are the days where no matter how bad the service was Americans had no other option.

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9 Responses to A New Study Looks at How Effective Free Trials Are at Acquiring New Subscribers

  1. Avatar
    Richard smith April 24, 2017 at 10:51 am #

    I don’t know how a study can quantify Amazon, doubt many people are signing up for Video only.

    • Avatar
      Sunny Rain April 24, 2017 at 11:02 am #

      True. Most people with Amazon Prime don’t even know that it offers “free” streaming shows and movies. They only use it for free 2-day shipping. Most people would be surprised to find out that Amazon is a Netflix competitor.

    • Avatar
      Ghostmaker April 24, 2017 at 5:52 pm #

      I’m not that impressed with Amazons movie choices. But usually 1 a month is decent.

      • Avatar
        Richard smith April 24, 2017 at 6:15 pm #

        And that’s because they have Epix.

  2. Avatar
    Joseph ewing April 24, 2017 at 11:05 am #

    The direction of this study is flawed.

    A better question to ask would be, “Would you have signed up for the service had there not been a free trial period where you could try it?”

    I am loving my PS Vue service, but don’t think I would have taken the leap of faith had I not had the 7 days to evaluate it.

  3. Avatar
    Sunny Rain April 24, 2017 at 11:16 am #

    I agree that the subscriber base has a ceiling. That’s why I still think Netflix needs to invest in Live TV.

    You can only acquire so many subscribers before the market is saturated. But if they offered a new service like Live TV, they would have another big revenue source. And it would be much easier for Netflix to get people to subscribe to a Live Service because they’re already a trusted OTT provider. Honestly, Netflix is missing a big opportunity.

    • Avatar
      Pebo Bryson April 24, 2017 at 2:24 pm #

      Netflix owns the on demand, no commercials ever, binge market. It would be a mistake to pivot and become just another live tv me too service. The less they have to deal with other content creators and broadcasters the better for Netflix and their subscribers wallets.

      • Avatar
        Bruce Wayne April 24, 2017 at 7:04 pm #

        He’s saying they should offer an alternative service. A choice. An option. He’s not saying they should add a live TV service to their current on demand service.