February 11, 2021

Binge, Abandon, Repeat

One-in-Six SVOD Subscribers Now App Hop

Incessant demand for video services during the pandemic drove a wave of SVOD subscriptions, with new TV streamers added to the roles and existing users expanding their app rosters. And, as if on cue, app hopping returned to the headlines.

For the uninitiated, app hopping is the act of recurrently subscribing to an SVOD service only to cancel once a promotion ends or a specific event or season has been viewed. While a fairly new type of service churn, we’ve learned a lot about this behavior in two years of research.

Principia
Unlike pay-TV churn, app hopping involves a prima facie intention to cancel a subscription service once a specific short-term objective is met. The behavior can be event-driven (e.g., to watch a new movie), season-driven (e.g., to view all new episodes of a TV series), or value-driven (e.g., to exhaust a free trial period), but in all cases the service is terminated once the objective is met.

The conditions giving rise to app hopping are well known, and include the following:

  • An incessantly expanding array of inexpensive, contract-free SVOD services;
  • A wave of media tribalism among content owners pulling high-value programming from Netflix et al. in order to populate new DTC services;
  • The consequent splintering of must-see content across a widening number of apps;
  • The rise of app aggregators such as Roku and Amazon Prime, which provide unified platforms for users to sign up for and cancel SVOD apps with a single click; and
  • The aggressive use of promotions tying 6-month to 1-year free or heavily discounted SVOD subscriptions to pitch must-have contract-based consumer services, such as premium mobile data plans or even credit cards.

While these trends were in place before the pandemic, most were accelerated by stay-at-home restrictions. Subsequently, at year-end 2020, U.S. OTT TV households used on average 4.6 SVOD services and paid for 3.0, up significantly from 2019.

Whether such levels of use bring us closer to widespread app fatigue is unclear, but one thing is certain: As SVOD expenses grow, so too will the number of subscribers looking to exploit lenient terms of service in order to minimize expenses. This is compounded by the absence of moral or economic disincentives for engaging in such behavior.

In the current environment, app hopping is not only legally permissible but tacitly encouraged. And while it may be a bit inconvenient to add or drop SVOD services on a regular basis, doing so can result in significant cost savings.

Defining Behaviors
App hopping is comprised primarily of three recurring behaviors, each described below.

  • Intentionally signing up for an SVOD service for a free or discounted trial period and cancelling before the first charge hits a credit card.

You know these consumers. They are the same folks that refuse to use a credit card for more than a year, cancelling once a promotional interest rate expires or mega-million-miles rewards can be used (i.e., at the end of a short-term contract). In the case of SVOD services, however, there is no contract to keep them in place for a specific period of time. As of December 2020, 7% of SVOD subscribers frequently engaged in this behavior.

  • Intentionally signing up for an SVOD service to binge compelling content then cancelling.

Since streaming services are designed for binge viewing (with new shows released a season at a time and hit movies featured in particularly short windows), it is possible for users to quickly exhaust the best a service has to offer and cancel. The logic is quite sound, and particularly attractive to viewers that can’t afford to pay for all of their favorite apps in any given billing cycle. As of December 2020, 9% of adult SVOD users frequently engaged in this behavior.

  • Intentionally signing up for an SVOD service to watch specific content, then cancelling and resubscribing when a new season starts.

This app-hopping behavior gained notoriety during the reign of HBO’s Game of Thrones, when throws of young adults were dropping in and out of HBO according to the show’s release schedule. As of December 2020, 6% of SVOD users frequently engaged in this behavior.

Each of these three behaviors, when done frequently, is logically sufficient to identify a consumer as an “app hopper.” In reality, the three are often intertwined. It is not uncommon that app hoppers recurringly sign up for a free trial (behavior 1) specifically to binge (behavior 2) a single season of a show (behavior 3), cancel before the first charge hits a credit card, then sign up again when a new season arrives (behavior 3).

Sizing the Audience of App Hoppers
For this reason, sizing the app-hopping community is not simply a matter of adding the three incidence rates together (7% + 9% + 6% = 22%). Instead, it requires measuring the union of the three sets. When this is done, 17% of all SVOD subscribers qualify as frequent app hoppers.

Some may argue that, by this standard, app hopping is not a serious threat to SVOD subscriptions. But that misses the point. If one-in-six would-be buyers are already hopping between paid apps, it’s just a matter of time before one-in-four are doing so, if not one-in-three. Now is not the time for head-in-sand rationalizations, as app hopping will only become more widespread as the stated behaviors become more commonplace.

Stick with TDG and stay ahead of the curve.

 
 

Michael Greeson co-founded TDG in 2004 and serves as President and Director of Research. As a 20-year veteran of the connected consumer and broadband media spaces, he has designed and fielded more than 50 quantitative consumer research projects and authored/co-authored more than 75 reports on multi-screen/multi-platform video and the connected consumer.

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