Amazon Prime Video has emerged as a new leader in the streaming industry, boasting the lowest customer cancellation rate, according to a recent study by Parks Associates. The study revealed that Prime Video’s annual churn rate stands at 8 percent, indicating that eight out of every 100 Prime Video members cancel their subscription within a 12-month period.
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In stark contrast, Discovery+ faces a significant challenge with an alarming annual churn rate of 43 percent, suggesting a high turnover of subscribers. The disparity in churn rates becomes more evident when comparing Prime Video and Netflix to other major streaming platforms. Hulu reported a 15 percent churn rate, while Max (formerly HBO Max), Peacock, Disney+, and Paramount+ recorded rates of 17 percent, 17 percent, 21 percent, and 24 percent, respectively.
Apple TV+ narrowly surpassed Discovery+ with a churn rate of 40 percent, potentially influenced by fluctuations in subscriber numbers around key content releases like “Ted Lasso.”
The reasons behind Prime Video’s success and Discovery+’s struggle are multifaceted. Prime Video benefits from a vast subscriber base that includes Amazon Prime members, estimated to be in the hundreds of millions. On the other hand, Discovery+ faces stiff competition, particularly after HBO Max’s rebranding and expansion, offering a broader range of content that includes Warner Bros. films and Max originals.
Netflix, the streaming giant, maintains a relatively low monthly churn rate of 2 percent, translating to a 9 percent annual churn rate. In comparison, Amazon Prime Video’s marginally better loyalty rate may be attributed to Prime members opting for yearly plans, a feature not offered by Netflix.
Eric Sorensen, the director of Parks Associates’ Streaming Video Tracker, noted that Netflix is steadily closing the gap with Prime Video in terms of annual churn rate. Sorensen highlighted Netflix’s diverse service tiers and syndicated content, such as the popular series “Suits,” as contributing factors to its retention strategy.
The latest Parks Associates consumer survey, encompassing 8,000 internet households, tracks churn data for 89 services, with 85 being SVOD (Subscription Video on Demand) or hybrid services. The study revealed an average annual churn rate of 47 percent for all OTT (Over-The-Top) services, underscoring the competitive landscape of the streaming industry.
