Netflix: churn, content release and marketing

Report Overview

Netflix: churn, content release and marketing

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Netflix: churn, content release and marketing
Netflix’s US business provides an insight into the patterns of the subscriber take-up of a maturing streaming service, trends that the comparatively nascent international markets may yet have ahead
Through analysis of the relationship between Netflix’s churn, subscriber additions, marketing spend and content release schedule, a clearer view of the rhythms of the streaming business become apparent
Rising churn, and correlation—such as the emphasis on returning original series during the year’s turbulent second quarter—gives guidance on Netflix’s likely future course, including its use of debt

Contents

Subscriber additions remain seasonal and converting free trials to paid is getting harder

Churn is concentrated around Q2 and is increasing on a yearly basis

Netflix fights churn though the release of returning original series

Rising churn requires rising marketing spend

Netflix’s debt is affordable but continually rising costs will make the load difficult to pay down

List of charts/tables

Figure 1: Netflix US YoY subscriber (paid and free) growth, by quarter

Figure 2: Netflix US subscriber adds (net) and free trial sign-ups (m)

Figure 3: Netflix US ratio of net paid subscriber adds to free trials

Figure 4: Netflix Int.* subscriber adds (net) and free trial sign-ups (m)

Figure 5: Estimated* US Netflix paid subscriber churn, quarterly

Figure 6: Average season number of Netflix Original series released

Figure 7: Netflix marketing spend ($m)

Figure 8: Netflix content spend ($bn)

Figure 9: Netflix long-term debt maturity dates ($bn)

Figure 10: Netflix total streaming expenses and revenue, US and International ($bn)