Why Are Netflix Subscribers Most Likely to Quit in the First Month?
Following the first quarter of the year, Netflix reported its first quarterly subscriber loss in its life as a streaming-first company. This shocking result has led to a great deal of speculation about the company’s standing in the market, and prompted a number of dramatic changes for the service, including the upcoming addition of an ad-supported tier, efforts to curb password-sharing, significant staff cuts, and more.
Now, new data indicates another problem for Netflix: Subscribers to the service are more likely to quit in their first month than they are for any other service.
The data, coming from the research firm Antenna and published by Recode, shows that Netflix in the top spot for those who quit in the first month, ahead of Starz, Paramount+, Showtime, Peacock, and Apple TV+.
And perhaps more worrisome for Netflix, Antenna’s data indicates that Netflix was in the lower range of streamers until just before the start of 2022 when the service surged to the top of the list, likely for a variety of reasons.
Why is Netflix suddenly losing so many new subscribers that quickly?
One reason that customers could be exiting the streaming giant so quickly this year might have to do with the service's price hikes that went into effect in January. While any consumer signing up for Netflix at this point is going in knowing the price, when they get there, they might find that the monthly fee isn’t worth the content available to them.
The streamer reportedly saw 3.6 million customers cancel their service in direct response to the price increase, and as new customers sign up, they very well might come to the determination that there’s not much on the service that they want to watch beyond the specific show that got them to sign up in the first place.
There has long been speculation that Netflix has been hurt by the losses of longtime comfort-food standbys like “The Office” and “Friends,” both of which ran for many seasons and have inspired lengthy re-watching binges. Those two shows left Netflix for Peacock and HBO Max, respectively, although Netflix added the entire run of “Seinfeld” in 2021.
Another possibility is that the streamer’s signature binge model, in which Netflix releases a season’s worth of episodes all at once, is making it less likely for customers to stick with the service. While this strategy was seen as revolutionary in the service’s early days — highlighting the differences between streaming and cable — many now believe that it is a significant detriment to maintaining a consistent subscriber base. Nearly all of Netflix’s competitors are opting for weekly releases for their biggest shows in an effort to keep customers engaged (and subscribed) for the entire duration of a season, rather than giving them reason, and time, to churn and return.
While many onlookers have been calling on Netflix to change its episodic release patterns, company execs have reiterated that the binge model is “fundamental” to how Netflix operates. However, the service has begun to experiment with releasing seasons in multiple parts, in order to keep interest as high as possible.
The streamer did this earlier in the year with “Ozark,” and with the return of “Stranger Things.” The latter show, one of Netflix’s most popular, put out seven episodes in May and will release two more super-sized editions on July 1. While the service is claiming that it will stick to its release model moving forward, it has shown some flexibility in moving to weekly releases.
When Netflix airs episodes of “The Great British Baking Show” every fall, it releases them on a weekly basis, three days after they air in the U.K. (as “The Great British Bake-Off”). Additionally, company execs have shown that they are open to experimenting with individual episode release schedules for their original programming, but until now it has been almost exclusively with non-scripted reality content. Last summer, Netflix went to weekly releases for “The Circle” and “Too Hot to Handle.”
Beyond cost and programming concerns, Netflix simply has a lot more competition now than it ever has before when it comes to streaming. While the service is still considered the top “must-keep” brand in the industry, for those consumers who are unable to find what they need on the platform, they are turning to other up-and-coming options to fill their needs. Studies indicate that customers who leave Netflix are most likely to turn to Disney+ and Apple TV+, platforms known more for their compelling, quality content than Netflix has been recently.
Whatever the reason for these early cancelations, Netflix needs to find a way (or more likely, many ways) to stem the tide of subscriber exits. While the platform continues to maintain the largest share of the streaming market, its rivals are making inroads. Netflix rose to power by disrupting the way that people viewed TV and movies, but a decade later, the service is now the one being disrupted. If the service is to keep its place atop the streaming mountain, it will likely need to innovate in ways that it hasn’t since its early days online.
Netflix
Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.