The Cancellation Conundrum

Customers love to stream, until the free trials expire

- Christopher Palmeri

Walt Disney Co.’s new streaming service, Disney+, signed up 10 million customers last month, well ahead of expectations. And it’s got a buzzy show with the Star Wars spinoff The Mandalorian. Now the world’s largest entertainment company has to figure out how to keep people from canceling the service after that series’ season finale on Dec. 27 or when their free trials expire.

Everyone wants to be the next Netflix Inc., with its 158 million customers worldwide. In addition to Disney, Apple has introduced its own streaming service, and Comcast and AT&T are set to follow early next year. But such services have some of the highest cancellation rates among subscription-based businesses, according to Recurly, which provides billing assistance to the industry.

Only about a third of customers stick around after free trials run out, and roughly 10% of members quit video streaming services monthly—twice the rate for games, music, and other entertainment. “There’s a learning curve,” says Dan Burkhart, Recurly’s chief executive officer. “Some of these large organizations are going to have to learn how to deal with data, and [then] putting it into practice requires time.”