Conversation Rates for Online Paid Subscription Services
According to research from Parks Associates, the conversion rate for online subscription services is 58%. This means that out of all US broadband households that tried an OTT video subscription service, 58% ended up being paying subscribers. According to a survey by McKinsey & Company, the conversion rates for the different types of online subscription services are as follows: replenishment services 65%, curation services 52% and access services 51%. However, after an extensive and exhaustive search, we could not find conversion rates for paid OTT streaming services that have actual sign-ups or purchases, but we included non-retail online paid subscription services such as online replenishment-based subscription services that have actual purchases periodically. Below is our methodology and a deep dive into our key findings.
In order to provide the baseline conversion rate for online subscription, we first looked at business news, marketing sites, and news sites such as Forbes, Business Insider, and RapidTVNews. We searched through these sources because they give insight about online subscription conversion rates. We found this source from RapidTVNews that shows the conversion rate for broadband households who tried an OTT video subscription service. We could not find any information for conversion rates that for online subscription services that have actual sign ups or purchases.
Next, we looked at survey and research sites such as Pew Research. We considered this strategy because survey sites usually give information about subscription sites and the detailed facts. We found survey results from McKinsey that show the conversion rates for online subscription that have actual purchases. So we broadened the research criteria to include the data for non-retail online paid subscription services such as online replenishment-based subscription services that have actual purchases periodically. We also located this Park Associates source on the OTT Video Market Tracker. Unfortunately, this source is behind a paywall but we believe it may offer useful insights since it features monthly updates on the trends and market activities in the OTT video space. We could not find the baseline conversion rate for online subscription services that have actual sign-ups or purchases because the information is not publicly available and may be contained in paywalled reports. Below is a deep dive into our key findings.
BASELINE CONVERSION RATE
According to research by Parks Associates, the conversion rate from trial to paid subscription for OTT video subscription services is 58%. Although most OTT service providers are concerned that consumers "are churning through trials" so that they can avoid paying, more free trial users are moving on to paid subscription. The research also reports that 80% of users trialing more than three OTT services end up subscribing to at least one of those services.
According to a McKinsey & Company survey, there are three broad categories of non-retail online paid subscription services in the United States. The first category is replenishment subscription services and 65% of subscribers on trial move into paid subscription. Replenishment subscription services such as the Dollar Shave Club help customers to automate the actual purchase of items such as razors. The next category is the online curation subscriptions. These subscription services provide customers with new, customized, and personalized beauty and food products. An example of curation subscriptions is like Birchbox, which has actual purchase for beauty products periodically. The conversion rate for curation subscriptions is 52%. The third category is online access subscription which allows subscribers to get apparel and food at lower prices by paying a monthly fee. The conversion rate for access subscribers is 51%.