Netflix: Why Subscriber Retention is High as New Subs Flock to the SVOD Leader

There are two drivers of a success for an SVOD service: Subscriber Acquisition & Retention.

Netflix continues to attract new subs during its relentless global expansion.
Its retention rate is reported to be high, despite recent rate increases.
Subscribers keep on coming, and they don’t go away.

Here are several reasons why:

Source: U.S Subscribers, Statista

1. Netflix Originals

Netflix is ever-expanding its pipeline of original content.
Analysts estimate Netflix could spend $15 billion in cash on content this year.
And release 90+/- feature films, documentaries & animated films.
That’s triple or more any other studios’ output.
Plus, Netflix is expanding into Lifestyle, Sports and other genres.
- It resembles more and more a platform like a cable or satellite distributor than a single channel.
Takeaway: Subscribers worldwide feel that there’s always something new to watch on Netflix, and they keep paying their monthly bill.

2. Global Satisfaction

Netflix is investing heavily to become the #1 global SVOD brand.
Originals are being commissioned in more and more global markets, as far apart as Ireland, Turkey and India.
Takeaway: Content is relevant no matter where you live.

3. Netflix Viewing

Netflix viewers are spending more time with the service.
Hit shows are reaching massive audiences.
Netflix reports that it’s now serving 100 million hours per day in the U.S. alone solely to TV screens.
(With my partner John Morse, we are working on obtaining breakouts for documentary viewing.)
According to VideoNuze’s Will Richmond: “Especially for cord-cutters, Netflix has become the go-to service when sitting down to watch TV.”
Takeaway: The more time spent watching, the higher the retention rate.

4. Netflix A-listers

A-list actors and directors are flocking to Netflix for scripted series and movies.
The Netflix documentary strategy also targets A-List directors, producers and talent.
- The preferred subject material also often covers A-Listers, like Lady Gaga.
- Even Stephen Spielberg shows up in the documentary category for Five Came Back.
In the first few entries, my Netflix documentary database includes: Guillermo del Toro, Francis Ford Coppola, James Cameron, Mitt Romney, Louis Theroux, Barbara Kopple, Edward Norton, Leo DiCaprio, Morgan Neville and many such more…
Takeaway: Big names drive customer awareness and press, build perceived value, and thereby encourage retention.

5. Netflix: Programming Decisions & BIG DATA

Don’t miss my post: How Netflix’s Continuous Innovation Strategy Drives Programming Decisions
It summarizes a Netflix executive’s presentation on how BIG DATA drives the personalization of programming decisions.
Takeaway: Netflix tests and tracks how you respond to every pixel on your interface. And that drives satisfaction and retention.

6. Netflix: Retention Operation

Netflix is invested in winning back its customers who cancel their subscriptions.
For example, I discovered that our household was paying for two subscriptions.
I cancelled one of them, but then received several calls from a customer service rep.
He had completed a PhD in the arts of gentle persuasion and he just didn’t want me to go away.
Takeaway: Netflix doesn’t readily accept “Unsubscribes”.

7. Netflix is Inexpensive

Even at its higher rates, I’d wager that many Netflix subscribers still see it as the best value around. Compared to going to out to the movies, subscribing to pay-TV or premium channels like HBO, Showtime, etc or attending a live sporting event, Netflix is quite inexpensive – all the more so for families. For many families on a budget, Netflix is an unbeatable value proposition. Will Richmond