Free Trials: For Freeloaders or a Path to Long-Term Customers?
We’ve all been there: a year goes by and you’re still paying for that online subscription because you never cancelled the free trial. Sometimes we stick around simply because we forget. But occasionally, we might just like being paid subscribers.
2020 has seen a remarkable uptick in the popularity of free trials, especially for media and fitness apps. Brands like Peloton and Quibi have seen app downloads in the millions, largely thanks to generous free trial offers. And Apple even announced a new feature called offer codes, which aims to help mobile brands acquire and retain subscribers through free and discounted subscriptions, particularly in crowded app categories like streaming and fitness.
Yet despite the rise in free trials this year, the question remains: is this method a good strategy for long-term user engagement? Or does it just lead to quick and short-lived user acquisition?
FitBit and Peloton Pick up the Pace with 90-Day Trials and Premium Content
Fitbit Premium, which gives users access to guided workouts, meditations, personalized health insights and sleep tracking, announced that it’s clocked over 500K paid subscribers less than a year after launching. That increase is partly due to the company’s extension from a standard 30-day free trial to a 90-day free trial back in March, as well as the addition of 40 new pieces of Premium content like workouts and meditations.
Similarly, Peloton (which offers thousands of ‘no bike required’ cardio, strength training, and yoga classes on its app) extended its 30-day free trial period to 90 days at the start of the pandemic. Average daily downloads spiked by 245% in the month following the extension, and in-app purchase revenue increased by 12.2% YoY.
Despite the 90-day free trial coming to a close, premium subscriptions have continued to grow. The app even recently hit an all-time record for single day revenue ($40K) thanks to a spike in paid subscribers. That spike is beginning to level off, but Peloton’s daily in-app revenue still remains significantly higher than it was prior to the initial free trial offer.
Hulu, Disney+, and Peacock Aim to Outlast the “Pandemic Peak”
68% of Disney+ users and 66% of Hulu users increased their usage of the streaming platforms in the month following Coronavirus lockdowns. But as restrictions have eased (and as we’ve all binge-watched more content than we care to admit), that “pandemic peak” has started to decline. As the surge slows, streaming providers have leveraged free trial offerings to vye for audience attention.
Hulu offers a 30-day free trial of its standard service or a 7-day free trial of its Hulu and Live TV package. Other content platforms like NFL Game Pass, Disney+, and Peacock also offer a 7-day free trial for new customers, although users who sign up for Peacock via the brand’s Android app or Android TV can access an extended free trial of up to 60 days. In the first few months since launching this past Spring, the NBC-backed service signed up 10 million subscribers, but it certainly still has room to grow (by comparison, Disney+ raked in more than 10 million sign-ups in just over 24 hours after its launch).
In an effort to continue enticing users in the crowded streaming market, some platforms have turned to partnerships to essentially extend their free offerings. Disney+, for example, offers a free year of the service for people with an unlimited Verizon plan. And Peacock is working on deals with cable providers like Comcast to bundle its Premium platform with standard cable services as a free perk.
How Will Subscription Brands Monetize After the Free Trial Bump?
Clearly free trials are a great way to see a spike in app downloads, particularly when customers are cooped up at home and searching for new ways to stay active and/or stay glued to their couch. But will users just make a run for it when those free trials expire? According to recent research, about half of surveyed streaming consumers canceled their free trial after they finished watching a show.
In the crowded world of fitness apps and streaming platforms where users can pick-and-choose between a multitude of free trial offers, getting customers to not only opt-in to the free period, but also stick around for the long haul is becoming increasingly difficult. Now more than ever, brands need to employ more than just the traditional subscription model to monetize their app, reduce churn, and increase customer lifetime value.
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