Is Netflix Weathering The Storm?
Netflix did everything they could in 2011 to piss people off. First, they messed with the subscription structures in a way that separated streaming and DVD plans into two equally priced entities (DVD used to be a cheap add-on to streaming). This, of course, turned out to be a price hike for users who wanted to keep both services – so many of them decided not to.
Netflix added new content to Netflix Instant this year, but also lost a key deal with Starz, which means the Netflix will lose important new releases from Disney and Sony.
And then there was the whole Qwikster mess, you remember, right? That’s the time when Reed Hastings thought it was a good idea to split Netflix’s streaming services and their DVD serives into two entirely separate companies. If you recall, that went over
really well terribly.
Netflix’s Q3 earnings report showed that although posting record revenue, Netflix did in fact lose some subscribers as a result of these moves (as they predicted they would). Actually, they lost a lot of subscribers – about 800,000 to be exact.
Some users left Netflix all together, and some just dropped one of the services. It’s no secret that Netflix is trying to move away from physical DVD rentals – so subscriber loss in that department is really part of the plan.
New research by Citigroup suggests that Netflix might be weathering the storm.
As you can see, Netflix subscribers in May reported being “extremely satisfied” with the service at a much higher rate than respondents in December. But December saw an increase in people saying they were “very satisfied” and “moderately satisfied.” All in all, 91% in December said that they were at least moderately satisfied with Netflix, down only 1% from the 92% that answered that way back in May.
Netflix subscribers that stuck around might not be as ecstatic as they were back in May, but it doesn’t look they they are too unhappy to stay.
Here’s another chart from the survey, showing Netflix compared to other streaming video sources:
Not only has Netflix increased its reach in the online video sphere, but most of the others remain stagnant. Folks saying that they watched streaming video on Hulu dipped 4% from May.
Netflix has said that they fully expect to lose more subscribers. Can competitors actually close the gap? Or is Netflix going to weather the storm? Let us know in the comments.