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Guest blog: Cancellation due to credit card problems huge issue for SVOD industry

Guest Blog by Colin Dixon, Founder and Chief Analyst at nScreenMedia

A new consumer study shows involuntary cancellations are a huge problem for SVOD providers. More than a quarter of US and a third of UK online video streamers (OVSs) have been affected.

The new free nScreen nSights report “Keep My Customer” – Why Consumers Subscribe to, Stay with, Cancel, and Come Back to Online Video Services from nScreenMedia details the subscription behavior of online video subscribers in the US and UK. The survey and report were sponsored by Vindicia, an Amdocs company (NASDAQ: DOX) and a leader in business-to-consumer digital services monetization.

Involuntary cancellation a huge problem

The new report finds that involuntary cancellations, where a credit card problem results in automatic cancellation of a customer, are a huge industry problem. Just over a quarter of US and a third of UK OVSs say they have experienced involuntary cancellation. Of that group, 30% did not return to the service.

Involuntary cancellations are a problem particularly among young subscribers. Young adults are twice as likely to have experienced involuntary cancellation in the UK, and three times more likely in the US.

Free trials not being abused

Free trials are an effective tool to acquire new subscribers for online video service providers (OVSPs.) However, they are concerned that many consumers are abusing free trials to binge on shows and then cancel before paying. The report shows that the behavior is relatively uncommon. Just 5% in the US and 2% in the UK could be considered serial offenders. What’s more, the young are no more likely to be free trial abusers than their older peers.

Some other highlights of the report include:

  • One-third of UK and US Amazon Prime Video subscribers have purchased an add-on video service through the eTail giant
  • 55% of UK and 64% of US OVSs have been with their longest-tenured service for one year or more
  • Parents in the US are 14% more likely to take a 20% discount offer on a 3-month subscription than average, and young adults (18 to 34-year-olds) are 10% more likely

The new report looks in detail at the effectiveness of discounts in getting subscribers passed the all-important three-month membership barrier.  It also shows what service features are most effective at keeping customers loyal to a service. The answers to these and many other questions can be found in the new nScreen nSights report “Keep My Customer” – Why Consumers Subscribe to, Stay with, Cancel, and Come Back to Online Video Services.

Drawing on original survey data from the US and UK, the report gives a detailed view of the subscription behavior of pay online video customers. Report readers will gain an understanding of the number of services consumers take, the effectiveness of discounts and free-trials in winning them, and what keeps them subscribed. The reader will also learn the prevalence of involuntary cancellations and how to win back ex-subscribers.

About Colin Dixon

Colin Dixon is Founder and Chief Analyst at nScreenMedia. nScreenMedia is a resource to the Digital Media Industry as it transitions to the new infrastructure for multi-screen delivery. Through a mix of informed opinion, news, information, and research, nScreenMedia helps you make sense of multi-screen media. www.nscreenmedia.com

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