Tuesday, 20 September 2011

Study: Netflix Could Lose More Subs, Redbox Could Benefit

Study: Netflix Could Lose More Subs, Redbox Could Benefitby David Goetzl

As Netflix concedes that pricing increases have cost it customers, consulting firm Frank N. Magid Associates says it is at risk of bleeding even more subscribers. A Magid survey, conducted before the price increases went into effect for current customers, shows up to 30% of those could cancel their memberships, while Magid suggests RedBox may benefit.

The survey found that 9% of respondents said they would cancel their Netflix membership rather than switch to one of the new Netflix plans. An additional 7% said they would cancel for a reason not related to the price change, while 14% more said they were seriously considering cancelling.
The survey included 1,000 U.S. consumers, including 700-plus were Netflix subscribers.
Magid stated that Netflix's growth could be hampered by reasons beyond the pricing dissatisfaction, including the lack of content available for streaming. Redbox, which offers $1 overnight rentals, could be a beneficiary, as Netflix is dividing its business and launching a Qwikster DVD-by-mail offering, Magid stated.
"A major reason that many consumers are not happy with their Netflix service is due to the quality of the content selection in the streaming service," stated Mike Vorhaus, president of Magid Advisors. "Netflix will need to improve the breadth and timeliness of their streaming content to rebuild major consumer momentum."
Netflix is at risk of losing streaming access to Sony and Disney films after negotiations with Starz have apparently collapsed.
The Magid study found that 60% of Netflix subscribers use Redbox and nearly 30% suggest they will use Redbox more because of the Netflix price alterations.

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