Internet T.V. providers are offering shelter-at-home consumers extended free trials. But will people just binge-and-bolt or will they end up as subscribers?
Free offers proliferate
SLING TV, EPIX, HBO Now, and others are offering extended free trials of their content. The approach seems to be a win-win for shelter-at-home viewers and online video service providers (OVSPs.) Viewers get more quality content for free to help fill the extra time they have available to watch. OVSPs get an opportunity to demonstrate the quality and value of their service and hopefully convert some of the free users to paying customers.
In the past, free trials have been a useful tool to recruit new customers, with the only danger that people will binge the free content and bolt before paying for service. Today, however, the free trials are motivated not only by business concerns but also by the altruistic intent to make sheltering in place just a little more bearable. What does that mean for binge-and-bolt behavior, and will the extended free trials provide any business benefit at all?
Binge-and-bolt in the U.S. and U.K.
nScreenMedia asked online video subscribers in the U.S. and U.K. in 2019 if they had signed up for a service free trial and canceled before their first payment. Of that group, most (69%) had only done this with one service. Just 5% could be considered serial offenders, canceling four or more services during the free trial period in the last year.
In the U.K., 62% said they had signed up for a service free trial and canceled before the first payment. Of those, three quarters only did this once. A mere 2% could be considered serial offenders.
Much has been written about how young people fear commitment and might be predisposed to abuse free trial periods. The survey data suggests young adults are only marginally more likely to have canceled multiple services within the free trial period. In the U.S. and U.K., 16% said they had canceled two or more services within the free trial period. 24% of the U.K. and 21% of U.S. young adult online video streamers said the same. However, the number saying they had canceled four or more services was comparable to the average.
Binge-and-bolt behavior on the increase
The nScreenMedia data from 2019 suggests that in normal times OVSPs should not be overly concerned about binge-and-bolt consumers. The benefits of a free trial period seemed to outweigh by far the risk of abuse. However, these are anything but normal times.
Never have more people spent so much time confined to their homes. Consequently, the consumption of streaming services has reached extraordinary levels. Nielsen reports the amount of streaming time the week of April 13th, 2020, was double the same week in 2019.
Under these conditions, more people are sure to take advantage of the free service offers without any intention of paying for the service. Moreover, with fears of a recession and even a depression building, they will be reluctant to commit to new subscription services. In other words, binge-and-bolt behavior is likely to increase.
Paying customers are rising too
That said, Netflix’s Q1 2020 results suggest that free trials continue to be a useful marketing tool, even in these extraordinary times. The SVOD giant continues to offer a one-month free trial to new customers. In the first quarter, it delivered two million paying U.S. customers, three to five times more than many analysts expected.
Others could benefit from the same effect. Speaking to nScreenMedia, Warren Schlichting, Group President of SLING TV, said that many people were taking advantage of its Stay in and SLING free offer. It could be that SLING TV will turn Q4 2019’s 94,000 subscriber loss into a gain when it reports Q1 results in May.
Why it matters
Many online video service providers are allowing new customers to use their service for an extended period for free.
They are motivated to do this because:
- A free trial is a great marketing tool
- Providers want to support people as they stay at home.
The operators will see an increase in binge and bolt behavior but should also see an increase in paying subscribers.