According to research commissioned by Paywizard, the proportion of consumers with over-the-top (OTT) video subscriptions has increased from 25% to 45% in 12 months with more planning to sign up prior to Christmas. The study also indicates that 30% of all consumers surveyed intend to subscribe to pay OTT services such as Netflix (NASDAQ:NFLX), Amazon (NASDAQ:AMZN) Prime Instant Video and Hulu in the runup to Christmas this year, up from 27% in 2015. Of those, 18% are planning on subscribing for the first time and 12% on top of existing subscriptions.
The research indicates that 59% of the 6,242 consumers surveyed plan to watch more TV overall this holiday season. The study includes results from the United States, the United Kingdom, Germany, Brazil, Australia and Singapore.
Christmas 2016 looks strong for OTT operators, as the projected 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 indicate that 50% of those planning to take an OTT service for the first time this holiday season also intend to cancel their subscription within six months.
Bhavesh Vaghela, Paywizard's chief marketing officer, said: "There are definitely huge opportunities for OTT players to build on the momentum paid video-on-demand services are showing across all markets. Nonetheless, while OTT operators are poised for another huge lift this Christmas, 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."
The research also indicates that despite global OTT brands Netflix and Amazon Prime 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.
The survey indicates that more consumers intend to do their holiday TV viewing on smart TVs (85% in 2016 vs. 80% last year), while slightly fewer plan to watch on mobile devices (46% vs. 42% in 2015), which tracks with industry figures indicating stronger sales of smart TVs with built-in OTT compatibility.
Pay OTT adoption by Millennials remains strongest with 52% of all survey respondents under age 35 now having a subscription. Other demographics are catching up, as 47% of 35-44-year-olds now have a pay OTT service, compared to 27% last year, while 45-54s with subscriptions have risen to 42% from 25%. Younger audiences are more likely to sign up to OTT, with under-35s now nearly three times as likely to subscribe before Christmas as the 55-plus age group.
Top of the list of factors that would make an OTT subscriber terminate service is "too expensive," with 63% of those that already have a subscription listing it among the top three reasons they would cancel. While "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%).
