How Did Netflix Get So Good at Retaining its Subscriber Base?
How Did Netflix Get So Good at Retaining its Subscriber Base?
A new study from BB Media has valuable insights into Netflix’s success at keeping its subscribers as customers.
Even for the most seasoned analysts, explaining Netflix’s dominance over competing streaming streaming services is a complicated matter. There are numerous reasons that Netflix is so far ahead of the competition in terms of both global subscribers and revenue, but one major factor is it’s excellent at retaining subscribers around the world. A new study from BB Media shows just how successful Netflix is in this regard compared to peers like Apple TV+ and Paramount+, and digs into the reasons behind that success.
Key Details:
- BB Media found that 55% of Netflix subscribers from the U.S. and Canada held on to their Netflix account for more than two years.
- The majority of Apple TV+ and Paramount+ customers used their accounts for a year or less
- Competitive pricing, a big library, and getting onto the scene early have helped Netflix achieve such sterling numbers.
The survey from BB Media shows that Netflix is a juggernaut when it comes to customer retention in all regions except Asia-Pacific. Netflix only entered this region in 2016, and it also isn’t available in China, which hurts it when it comes to keeping customers subscribed to the service.
Even a relatively poorer showing in the APAC region doesn’t bring down Netflix’s impressive retention statistics globally, especially in the United States and Canada. In the UCAN market, 55% of Netflix customers stay subscribed to the streamer for two or more years; only 9% of Apple TV+ customers do that, and the number rises to just 14% among Paramount+ customers. In fact, both Apple TV+ and Paramount+ customers are far more likely to cancel subscriptions before they reach the six-month mark. Fifty-three percent of Apple TV+ customers in UCAN stay with the service for six months or less, and 48% of Paramount+ subscribers do likewise.
Being able to keep customers subscribed is key for streaming companies. As a rule, it’s almost always more expensive for services to acquire new customers than it is to keep existing ones, and Netflix’s ability to keep more than 50% of its UCAN customers is a key reason why it’s the most consistently profitable streaming service of them all.
But why is Netflix so good at keeping subscribers? BB Media’s analysis indicates there are multiple factors at play here. It credits Netflix’s early arrival on the streaming scene as a reason for its success; Netflix launched as a streaming service in 2007, when it and Hulu were essentially the only players in the streaming world. Its first-to-market advantage has helped it build brand recognition and loyalty over time.
BB Media also credits Netflix’s large and varied library for its ability to retain customers. The Netflix catalog is more than 300% larger than Paramount+’s, and over 8,000% bigger than Apple TV+’s. An inventory that size allows Netflix to offer titles in the top five preferred TV genres in most global regions, whereas Apple TV+ features only two of the top five globally preferred genres — Drama and Comedy.
Finally, BB Media points to the price of Netflix around the world as a reason for its high retention rate. Netflix’s ad-supported plan is a full $3 per month cheaper than standard options from competitors in Europe, the Middle East, and Africa. Netflix is the only platform with an ad-supported plan in EMEA and Latin America, which helps it offer its subscription at a competitive price relative to other services.
Netflix ended the second quarter of 2024 with nearly 278 million subscribers, and many of those viewers have evidently been with the streamer for some time. BB Media’s findings show that Netflix is far and away the best streamer at retaining subscribers, and why that is the case.
Netflix
Netflix is a leading subscription-based video streaming service that offers on-demand access to an extensive library of over 3,000 movies, 2,000+ TV shows, and a growing collection of acclaimed Netflix originals. Renowned for producing groundbreaking content, Netflix has become a cultural powerhouse with hit originals like “Stranger Things,” “Wednesday,” “Squid Game,” “The Crown,” “Tiger King,” “Bridgerton,” “The Witcher,” and “Black Mirror.”