Survey: Netflix OOH charge risks churn
April 29, 2022
According to home-media consumer intelligence specialist Aluma, a scheme being tested by Netflix in three South American countries requiring account owners to pay an extra $3 for each out-of-home user would see 13 per cent of adult Netflix account holders cancel their service if implemented in the US; an event made more certain by the announcement that the company lost 636,000 domestic subscribers in the first quarter of 2022.
“We believe concerns of subscriber exodus due to restricting illegitimate password sharing exceeds the reality, especially if the value of a service is sufficiently high and the means of restriction sufficiently elegant,” says Aluma.
According to a survey from Aluma, if such charges were introduced in the US, 13 per cent of adult Netflix heads-of-household would cancel service, while 12 per cent would add at least one $3/month user. As to who these would-be cancellers are:
- 48 per cent live in households that make less than $50,000 a year (vs. 35 per cent of Netflix users in general);
- 66 per cent are single (vs. 53 per cent);
- 56 per cent are between the ages of 18 and 34 (vs. 38 per cent); and
- Watch 20.0 hours of streaming video on TV each week (vs. 16.4).
Having exhausted its domestic subscriber base, Netflix has few options to grow profits in the US and Canada. The company has already leaned into price increases and international expansion to grow revenue – the efficacy of both now waning – all the while rejecting calls to add a less-expensive ad-supported tier or implement a more assertive authentication regiment. These ideas, once taboo, are now squarely in play. As Netflix leadership informed shareholders on April 19th, both will implement in the next six to 12 months.