While SVOD platforms like Netflix, Hulu and Amazon Prime Instant Video have been lauded for easy, immediate customer sign-up processes, the fact that exiting these services is just as convenient results in churn that is significantly higher than what is found in pay-TV.
“SVOD households generally churn at a higher rate than multi-channel video programming distributor (cable TV) households,” wrote BMO Capital Markets analyst Daniel Salmon. “We expect this is in part due to SVOD services’ generally non-restrictive cancellation policies.”
Culling Nielsen data, BMO Capital found that, surveying over a three-month span, 99 percent of cable customers still had their service in place after a 90-day period. But 5 percent to 7 percent of SVOD users had ditched their video on demand streaming service.
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