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Just How Many Subscribers Are Leaving Netflix?
August 2, 2007

Bloomberg's Jonathan Weil digs deeper into Netflix's churn numbers and finds that the company is losing more than half of its subscribers each year. Though, with the exception of the latest quarter, the retailer has generally added more new subscribers than it loses, allowing it to grow its subscriber base each quarter.

Weil notes that Netflix defines churn differently than most other companies including TiVo. That lowers the churn rate the online DVD retailer reports. By Netflix's estimation, churn in the latest quarter was 4.6%. By Weil's estimate, using the definition TiVo and others use, the retailer's churn was 16%. More surprising/disturbing was that Weil found that for the full year ending June 30, churn was 63%, meaning that the retailer lost two-thirds of its customers during the year. 

Bloomberg sees the churn as a possible sign of trouble to come for the retailer:

If it got to 6.8 million subscribers, assuming the 63 percent annual churn holds steady, Netflix would have about 4.16 million cancellations this year. That means it will need to have added 4.64 million new subscribers on a gross basis come Dec. 31. That's a whopping 73 percent as many subscribers as Netflix had at the start of 2007.

Momentum isn't on Netflix's side. Last quarter, Netflix added just 1.03 million new subscribers, gross, down 4 percent from a year earlier and down 32 percent from the first quarter.

via HackingNetflix

Posted by Jennifer Netherby on August 2, 2007 | Comments (0)