Netflix Removes Free Trial, Will Other Subscriptions Follow Suit?
Netflix has ended the free trial for U.S. consumers who wanted to give the streaming service a test run before a subscription. Now, consumers need to just take the plunge and either commit to subscriptions or wait for one of their other promotions, like two free days or watching free content elsewhere.
The company removed the option for US-based subscribers and has been phasing out the trial in other countries over the last couple of years. Instead, they’re trying to find new ways to attract subscribers, including posting educational content on YouTube or trying different forms of sampling.
One sampling method we’ll call the Sam’s Club model is their new portal that lets you watch a few episodes from its top series for free. You can get a sample from the tray, but you can’t turn it into an all-you-can-eat buffet.
The move happens even as other streaming services are pushing free trials hard in an attempt to build their subscriber base.
Of course, many streaming services are seeing accelerated growth rates. Earlier this month, PYMNTS reported that roughly 23 percent of streaming services were seeing faster-than-predicted growth.
According to their new Consumer Subscription Retail Services Report:
Streaming services are not the only subscription providers witnessing increased demand and use. The industry as a whole has added 15 million subscribers and 96 million subscriptions since the pandemic began, with the average consumer possessing 2.9 subscriptions in July — up from 2.6 in February.
So are these streaming services growing because of the free trials or because of the pandemic? Netflix is gambling that the pandemic is helping quite a bit and that they can gain subscribers just by offering good content and giving small samples elsewhere.
It’s a bold strategy, Cotton, let’s see if it pays off for ’em.
What Does Netflix’s Move Mean For Their Merchant Services Account?
One industry that sees a lot of chargebacks is the subscription industry, whether it’s streaming services like Netflix, Hulu, and Pluto, or even subscription box services like Canadian Traveller and The Woke Box.
The chargebacks happen when someone forgets to cancel their membership — especially after a free trial — and rather than be on the hook for their own forgetfulness, they dispute the charges and get them removed from their credit card. In other cases, it’s a question of friendly fraud where the consumer lies about their reasons for canceling and claims they never used the service or a box never arrived. (Read Chargebacks 101: How to Prevent, Avoid, and Dispute Them.)
Netflix’s cancellation of their free trial should help them cut the number of chargebacks they’re experiencing, which can only help reduce their overall chargeback rate. Netflix may be large enough that they don’t have to fear cancellation by their bank or merchant services provider, but smaller companies still do.
This is why Visa has begun requiring subscription merchants to start sending email reminders to members that their free subscription is about to end and to cancel before their credit card is billed.
Some industries and businesses are more prone to chargebacks than regular retailers, such as CBD dispensaries, subscription services, or adult entertainment, which makes it harder to find an adult merchant account services provider. Corepay can help you so you can process your payments quickly and easily. For more information, please visit our website or call us at (800) 408-0095.
Photo credit: PXFuel.com (Creative Commons 0)
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