Subscription streaming services offering free trials is a well-established way for them to gain paying subscribers. Users sign up for the free trial period, get hooked on content and decide to stick around to become a paying subscriber, or so goes the idea.
But this still requires SVOD services to give away their content for free for a whole month, with the risk that the free trial participants will not even convert into a paying subscriber. Netflix and Disney+ both recently got rid of their free trial periods, suggesting that the SVOD giants saw the downside of this promotional tactic.
Content is Key
The central pillar of this tactic to grow subscribers is hooking free trial users on great content that they can’t get elsewhere.
Wade Payson-Denney, an insights analyst at Parrot Analytics, says that free trials can be crucial in getting users in front of content they want to stay for.
“Demand for original content is the key leading indicator of subscriber growth, so getting eyeballs in front of that content, even if there is no immediate payoff, can be a necessary move for longer-term growth,” he said.
A high proportion of consumers who trial an SVOD service convert to a paying subscriber, says Colin Dixon, chief analyst and founder at nScreenMedia.
“Free trials are an extremely effective way of converting people to subscribers,” said Dixon. “When I talk to companies that track it in detail, what they usually tell me is between 50 and 70 percent of the people that sign up for a free trial convert to a paying subscriber.”
Although there is a net gain for companies who use free trials, the fact remains that a not insignificant proportion of free trial subscribers get access to all an SVOD’s service content without then becoming a paying subscriber.
High-quality original content is, of course, expensive to produce, which is perhaps why two of the biggest spenders on content, Netflix and Disney+, have stepped away from free trials.
Netflix dropped its month free trial period in the UK in December 2019, and in the US in October 2020. Disney+ have done the same thing in the US, UK and Canada.
Colin Dixon says the primary function of free trials is to give consumers a taste of your content, which for some of these services is simply not necessary.
“The effectiveness of free trials for a company like Disney+ is much lower. That’s not to say that they wouldn’t see conversion rates at the same level as others or even higher, they probably would. But the function of a free trial is to expose people to content so that they can see what’s in the catalogue and get a feel for the services,” he said. “And for Disney+, I’m just not sure that that’s necessary. Everyone knows what they’re getting with Disney.”
Minimising “Binge and Bolt” Behaviour
SVOD services using free trials run the risk that consumers simply view the content they want to see, and then ditch the service within the trial period, having not paid a penny.
However, nScreenMedia’s Colin Dixon says that the risk of this kind of repeated behaviour is minimal.
“I don’t think there are many people out there who are serial free trial abusers. It doesn’t seem to be a huge problem. But the way companies like Disney are tackling it is by serialising. Same with Apple TV+, they’re releasing an episode a week. So that kind of blunts the effectiveness of what I call “binge and bolt”, where you sign up, you watch and then you leave,” said Dixon.
Apple TV+ seems to have designed its free trial period with this in mind, says Wade Payson-Denney
“Apple TV+ was particularly smart to let its free trial period run out this past July roughly a week after the second season of Ted Lasso – by far its most popular series – began to release its second season. The free trial got audiences hooked on Ted Lasso in 2020, but they would have to start paying in order to watch the newer episodes of the series in 2021,” he said.
Alternatives to a trial period
When Netflix got rid of its free trials, it instead offered another promotional method that allowed consumers to view certain bits of content for free.
“Netflix has phased out free trials and has started offering versions of their shows and movies for free during certain times to try and get people interested that way,” said Payson-Denney, “Not asking for a credit card, but curating specific high profile series and films (even just an episode) may be enough to create the same kind of hook.”
Unlike the previous free trials, this promotion didn’t require consumers to enter card details to access. Although Netflix did prompt users when their free trial was coming to an end, the month’s subscription auto-renewed. SVOD services could gain paying subscribers simply from consumers who forget to cancel their subscriptions.
Parrot Analytics’ Payson-Denney says that Netflix’s tactic of offering specific free content with a payment card is better.
“From a behavioural standpoint, a free trial means people are waiting for it to end or are mad when it doesn’t end. But, if you give people stuff for free — and actually free, no credit card required — and they find their way to the platform, they’re more likely to stick for the entire month and beyond because it doesn’t come attached with an end date already in mind,” he said.
Colin Dixon also approves of Netflix’s alternative to a trial period.
“I’m really surprised more companies aren’t doing it. I think it’s a great way of exposing people to the content,” he said.
“The other thing I’m starting to see SVOD companies do is that they are launching FAST channels on free services with some of their library of content,” Dixon added.
Last year Netflix launched a linear TV channel in France that played a mixture of their content. Dixon says that SVODs with huge catalogues, like Netflix and Amazon Prime, can afford to offer up some of their content for free like this.
“They have a lot of content sitting in their library. Some of this content is sort of dead, it’s not being watched by many people,” he said, “But while it isn’t effective at retaining people, it may be a more effective tool in attracting new people.”