nScreenMedia OTT multiscreen media analysis

Ditching free trial will cost Disney+ later this year

Disney+

Disney+ has stopped offering a 7-day free trial. The company may figure it is growing so fast it just doesn’t need one and would like to avoid the risk of people watching big releases for free. If that is the case, Disney is wrong on both counts, and the decision could hurt subscriber growth later this year.

Disney+ ends free trial period

Disney has quietly dropped its 7-day free trial period. The absence was first noticed in France by Numerama, a French news site. A quick check of Disney+ in the U.S. shows it too no longer offers a free trial. Variety reports a representative of Disney had this to say about the withdrawal of the promotion:

“We continue to test and evaluate different marketing, offers, and promotions to grow Disney Plus. The service was set at an attractive price-to-value proposition that we believe delivers a compelling entertainment offering on its own.”

Indeed, signing up 54.5 million customers within the first seven months suggests there is an extremely high demand for the service. Such impressive performance must have executives believing a free trial just is not helping the service win new customers. They must be reasoning that $6.99 a month is low enough that people are comfortable paying to give the service a try.

There might also be some nervousness at Disney that people could use the 7-day free trial to watch tentpole releases without paying. For example, Disney+ will premiere the movie version of Hamilton on July 3rd, a year before it was scheduled for release in theaters.

However, data shows that free-trials are one of the best, low-risk marketing tools at the disposal of any SVOD services.

Free-trials work

Wicket Labs is an analytics company that helps SVOD providers leverage their user data to optimize customer relationships. In April 2020, CEO Marty Roberts had this to say about the effectiveness of free trials:

Marty Roberts - Wicket Labs

Marty Roberts – Wicket Labs

“Currently, we’re seeing a 68.2% free trial conversion rate, a 5.4% improvement from the benchmark we had a year ago. We are closely watching the current, longer, trial periods to evaluate their effectiveness as compared to the standard 7-day trials and our Wicket Scorecard benchmark.”[1]

It is hard to imagine any other marketing program that can deliver a 7-in-10 chance of acquiring a paying customer.

Looking at Disney+ from the outside, it is impossible to know how effective free trials have been there. However, the service is rapidly approaching a different phase in its growth, particularly in the U.S., where it has at least 29 million subscribers. As penetration deepens, it becomes increasingly difficult to acquire new customers.

People that have so far resisted the Disney+ allure are less likely to take the experience of the service on faith. Forcing them to pay to find out could have a substantial negative impact on customer growth. Moreover, the service might need new subscribers to offset an increase in churn. It has had no real standout series since The Mandalorian. With production only now just restarting, it could be many months before exciting new series are flowing into the service. In other words, bored customers may start canceling their subscriptions. After all, they can simply sign up again when something interesting comes to the service.

It is a low-risk enticement

The fear of people signing up for a free trial, watching a big title like Hamilton, and then canceling before any payment is taken is likely unfounded. In a 2019 survey of U.S. and UK SVOD users, nScreenMedia found few people abused free trials. Only 5% in the U.S. and 2% in the U.K. were serial free trial abusers.

Disney needs to trust its massive library of blockbuster movies and hit shows to translate a free trial user that came for Hamilton into a regular subscriber. I am willing to bet free-trial conversions will be much better than the already impressive 70% enjoyed by most of the industry.

frequency of free-trial abuse in the UK and US 2019

Why it matters

Disney+ no longer offers a free trial of the service.

A free trial is one of the most effective marketing tools for acquiring a new customer.

What is more, there is a low risk that people will abuse it and watch free content without paying.

[1] In an interview with nScreenMedia in April 2020.

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