Question

5. What is the Netflix churn rate and what are the reasons behind this rate?

Answer 1

The Netflix churn rate and the reasons behind it are discussed below :

The churn rate, also known as the rate of attrition or customer churn, is the rate at which customers stop doing business with an entity. It is most commonly expressed as the percentage of service subscribers who discontinue their subscriptions within a given time period.

Netflix, is an American technology and media services provider and production company headquartered in Los Gatos, California.

And with a relatively low 9% churn rate (lower than any other subscription streaming service), one has to wonder — how does a service like this continue to keep their customers engaged in both the short and long term?

Why Engagement is So Crucial to Netflix

As a subscription service, each new month gives every Netflix users a chance to cancel the service.

Like all subscription companies, the best step Netflix can take to reduce churn is to create a great product that people are willing to pay for. They do this by having a large library of original and licensed content. As long as people keep watching, they’ll keep paying.

Basically its Reluctant to Switch

With more than a third of U.S. households subscribed to Netflix, it’s no secret they’re far ahead of their competitors in the video streaming subscription race. A Recent research showed that only 4% of U.S. broadband households cancelled their Netflix service — representing almost 9% of Netflix’s subscriber base.

Perhaps some of what makes Netflix so irresistible among its user base are its original shows. With fan favorites like House of Cards and Orange is the New Black, Netflix has its finger on the pulse of what users are watching. And they’re not just skimming the surface, either. They look at things like:

• How many users watched a particular episode
• How many users watched an entire series
• How much of a gap was there between when the user watched one episode and the next?

And that’s not all. They’re also gathering data on:

• When you pause, rewind or fast-forward (or if you stop watching and never pick it back up again)
• What day you watch (most people watch TV shows over the week and movies on the weekend)
• What date and time you watch, as well as the zip code you’re watching from
• What device(s) you use to watch which media
• The ratings you give and the searches you conduct
• Your browsing and scrolling habits
• And even the data within the movies and shows themselves

Netflix knows when the credits roll – but it’s also speculated that they’re monitoring things like the volume, movie/show setting, colors and so on. All of this information is not just collected, but also acted upon.

Push in and app new notifications plus the emails that we added a new show you might like , recommendations for you etc. are some of the key factors behind this low churn rate of netflix.