New data shows that concerns over free-trial abuse are overblown. As well, the free-trial period is an effective way of recruiting paying customers.
Binge-and-bolt not a big problem
It is accepted practice for pay online video services to provide a free trial period for new potential customers. They are widely used, with trial periods offered between one day and one month.
However, there is a dark side to free trials. Some consumers sign up for a service, binge on as much content as they can, and then cancel without paying anything. Should service providers be concerned that this binge-and-bolt behavior is adversely affecting their bottom line?
nScreenMedia asked a group of online video streamers (OVSs) in the US and UK about their use, and possible abuse, of free trial periods. In the US, half of OVSs have signed up for a service free trial and canceled before their first payment. Of that group, most (69%) only did 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 UK, 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 information about why consumers sign up for, stay with, cancel, and re-subscribe to online video services is available in the free nScreenMedia report Keep My Customer.
The young no more likely to abuse free-trials than average
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 US and UK, 16% said they had canceled two or more services within the free trial period. 24% of UK and 21% of US young adult OVSs said the same. However, the number saying they had canceled four or more services was comparable to the average.
Free trials an effective recruitment tool
Operators should feel comforted that most free-trial users are not free-trial abusers. However, is the practice an effective customer recruitment tool? New data from Parks Associates suggests it is. The company found that 58% of those that sign-up for a free trial end up becoming a paying customer.
What’s more frequent free-trialers are more likely to sign up for a service. The company found that 80% of those people trialing 3 or more services signed up for at least one of the services.
Why it matters
Free trials are widely used in the SVOD industry to entice people to sign up for a service.
Data shows that most people don’t abuse free-trial periods.
Data also shows that they are an effective way to get people to commit to a video service.