New Study Reveals the Average Online Video Subscriber in the U.S. Subscribes to 3.4 Streaming Services and Pays an Average of $8.53 Per Service

Vindicia,
an Amdocs company (NASDAQ: DOX) and a leader in business-to-consumer
digital services monetization, today released a study it commissioned
from nScreenMedia that delves into consumer relationships with streaming
video services and viewing behaviors. The study, “Keep My Customer” –
Why Consumers Subscribe To, Stay With, Cancel, and Come Back to Online
Video Services, found that 70% of households in the U.S. and 40% of
U.K. homes have a subscription to at least one streaming video service,
and that the average subscriber in the U.S. watches 3.4 services and
pays an average of $8.53 per service.

One of the study’s major findings is that involuntary cancellation is a
serious problem for the industry. These payment failures occur when a
credit card problem, such as insufficient funds, results in automatic
cancellation of a customer. The study revealed that over a quarter of
U.S. and a third of U.K. online video streamers have had a subscription
video on demand (SVOD) service canceled due to a credit card problem.
And of those groups, 30% did not return to the service.

“Involuntary cancellations are a huge problem for the SVOD industry,
particularly among young subscribers,” said study author Colin Dixon,
Founder and Chief Analyst at nScreenMedia. “Young adults from 18 to 34
years old are twice as likely to have experienced involuntary
cancellation in the U.K., and three times more likely in the U.S.”

“For video streaming services, the ability to acquire and retain
subscribers is vital to their success,” said Anthony Goonetilleke, group
president, Media, Network and Technology, Amdocs. “However, streaming
services are losing subscribers—and millions of dollars in annual
revenue—due to involuntary credit card cancellations. This kind of
customer churn is largely preventable. By leveraging the right
intelligent technology, video streaming providers can recover failed
payment transactions and capture revenue that would otherwise be lost,
enabling them to better compete in a highly competitive market.”

Cancellers can be persuaded to come back

In terms of overall cancellations, the survey looked at how often people
cancel their service and their reasons for doing so. In the U.S., 38% of
the survey group say they have canceled one or more services in the last
year. Of that group, two-thirds say they had canceled one service only,
and just one-in-ten have canceled three or more services.

Netflix users are slightly less likely than average to have canceled
service in the last year. Hulu users are slightly more likely. And
Amazon Prime Video users are no more or less likely than average. The
top two reasons cited for canceling a video service: people couldn’t
find enough content they liked and didn’t find the service good value
for their money.

The good news for service providers is that old customers are their best
new prospects. They study found that 33% of U.S. and 25% of U.K.
cancellers have been persuaded to sign up for service again.

Discounts are a prime opportunity

It is no secret that video streaming is a hyper-competitive market.
Another important finding is that discounted subscriptions are an
under-exploited opportunity for service providers to win new customers.
The survey revealed that a 20% discount for a three-month commitment
generated the highest interest level, with 66% of U.S. and 57% of U.K.
subscribers saying they were likely or extremely likely to take the
offer.

Three months is an important milestone to reach, because subscribers
that stay this long are much less likely to leave the service.
Surprisingly, the study found that offering more than a 20% discount did
not result in more interest.

Free trials not being abused

The study also found that free-trial abuse is not a serious problem for
online video service providers. While 49% of U.S. and 62% of U.K. online
video subscribers have canceled at least one service within the free
trial period, only 5% in the U.S. and 2% in the UK have canceled within
the free-trial period four or more times in the last year.

Content is still king

When it comes to retaining existing subscribers, content is king. The
study found that 64% of U.S. subscribers and 55% of U.K. subscribers
have been with their longest-tenured service for one year or more. When
asked why they stay, respondents said having plenty of interesting
content to watch was the top reason. Value for money was a close second
place, and ease of finding something good to watch came in third.
Interesting original content was the fourth reason, while providing
plenty of new shows took the fifth-place spot.

Amazon’s expanding influence

Amazon’s expanding influence in the VOD market is evident. The study
found that one-third of UK and U.S. Prime Video subscribers have
purchased an add-on video service, with higher income individuals more
likely to use Amazon Prime Video and to purchase an add-on.

In the U.S., the most popular video add-ons are premium services like
HBO, Starz, Showtime, and Cinemax. CBS All Access is also very popular.
In the UK, the most popular video add-ons are Eurosport Player,
Discovery, ITV Hub+ and FilmBox.

To learn more about the nScreenMedia study or to download a copy, visit here.

About Vindicia

Vindicia, an Amdocs company, offers comprehensive subscription
management solutions that help businesses acquire and retain more
customers. Providing much more than just a billing and payments system,
the company’s SaaS-based subscription management platform combines big
data analysis, strategic consulting and proprietary retention
technology. Vindicia provides its clients with more recurring revenue,
more customer data, better insights, and greater value throughout the
entire subscriber lifecycle. That’s why they call us the Subscription
People. To learn more visit www.vindicia.com.

About Amdocs

Amdocs is a leading software and services provider to communications and
media companies of all sizes, accelerating the industry’s dynamic and
continuous digital transformation. With a rich set of innovative
solutions, long-term business relationships with 350 communications and
media providers, and technology and distribution ties to 600 content
creators, Amdocs delivers business improvements to drive growth. Amdocs
and its 25,000 employees serve customers in over 85 countries. Listed on
the NASDAQ Global Select Market, Amdocs had revenue of $4.0 billion in
fiscal 2018. For more information, visit Amdocs at www.amdocs.com.

Amdocs’ Forward-Looking Statement

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Form 20-F for the fiscal year ended September 30, 2018 filed on December
10, 2018 and our quarterly 6-K form furnished on February 19, 2019.

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