2019 has arguably been Netflix’s most challenging year since the streaming service became a standalone offering over 8 years ago. The streaming leader has struggled with slowing subscriber growth domestically all year while also bracing for increased competition from media and tech giants alike as services like Disney+ (which earned 10 million subscribers on its first day) and Apple TV+ have just launched and others from WarnerMedia (HBO Max) and NBC (Peacock) are on their way.

Furthermore, the streamer has also warned it will likely add fewer new subscribers in the fourth quarter of this year than it did last year, which isn’t surprising with the buzz around the shiny new, much cheaper Disney+ at the moment. And in an October 16th letter to shareholders, Netflix admitted it hasn’t been retaining US customers at its usual rate.

Why exactly is Netflix struggling to keep its customers? And what kind of subscribers are they losing?

We partnered with an unaffiliated third-party data analytics firm to survey over 1,000 customers who have canceled Netflix in recent months. Our goal was to figure out what types of people were leaving Netflix, why they canceled their service, and if they had any plans on returning in the future.

Here’s what we found:

 

Key Findings

 

Most Customers Who Canceled Netflix Had Been Longtime Subscribers

63% of those who unsubscribed had been using Netflix for more than a year.

netflix survey graph 1

In the second quarter of 2019, Netflix reported its first loss of domestic paid subscribers since 2011. Perhaps most troubling for Netflix is it seems to be driving away its most loyal customers. Our survey found the vast majority of customers who canceled service in recent months had been subscribed for more than a year. The next largest group of recent ex-subscribers was made up of those who had been using the service for 7 to 12 months. In fact, the smallest group of recent cancelers, at just 7%, was free trial users.

 

Most Subscribers Are Unsure If They’ll Return

While 58% of subscribers don’t know if they’ll sign up for Netflix again any time soon, 25% say they definitely won’t.

netflix survey will customers return

One of the great things about streaming services like Netflix is customers can drop the service and pick it back up at any time since there are no contracts. So, while it is worrying that Netflix is mostly losing some of its most loyal subscribers, there’s always the opportunity to win them back — at least some of them, anyway. 1 in 4 Netflix customers say they will not resubscribe to the streaming service in the near future, and only 17% say they’ll return for sure. Most subscribers (58%) just aren’t sure yet if they’ll come back, and given the most common reasons people ditched the service in the first place (more on this below), it’s no guarantee Netflix will be able to win them back.

 

Price Increases, Lack Of Quality Content, & Competition Are Biggest Reasons For Canceling

49.4% of those who canceled cited the latest price increase as a key factor.

netflix survey reasons for canceling

In the eyes of roughly half of those who recently canceled Netflix, the service has simply gotten too expensive after its latest price increase back in May — the largest price increase the company had ever imposed on customers. Netflix’s most popular plan — its Standard offering — increased from $10.99 to $12.99 a month, while its Premium plan that allows 4K streaming on up to 4 devices simultaneously jumped from $13.99 a month to $15.99 a month. For many, the price hike was the final straw, especially at a time when new competitors were announcing cheaper pricing, like Disney+ at $6.99 a month with 4 simultaneous streams and 4K streaming, Apple TV+ at $4.99 a month, and NBC considering making its upcoming Peacock streaming service free for all.

But price isn’t the only major reason for customers leaving. 42% of those who have recently canceled indicated they aren’t pleased with Netflix’s current content slate which has been increasingly focused on its original series as the company has struggled to maintain rights to beloved licensed shows and movies

Meanwhile, 40% of recent former subscribers said they were subscribing to other streaming services instead, a challenge Netflix will continue to face as more competitors enter the marketplace.

 

Netflix Doesn’t Need to Panic…Yet

While Netflix is undeniably facing major domestic challenges as it tries to reach its eventual goal of 90 million US subscribers (it sits around 60 million at the moment), the company continues to grow rapidly internationally, bringing its total subscriber count to 158 million in over 190 countries worldwide.

Netflix will continue to grow in international markets in the coming months and years, which certainly provides a level of hope and optimism for the company. However, it cannot afford to ignore the increased domestic churn it’s facing domestically as more competitors with appealing, lower-priced offerings attempt to win over customers in the coming quarters.

Hastings has said that Netflix won’t lower its pricing in response to new services, so the pressure will be on to deliver content that both attracts and retains subscribers, making them feel the service is a good value even at its higher price point. To that end, Netflix continues to spend billions of dollars developing content to make customers stick around.

Will it be enough?

 

Notes about our survey: 

Participant source: Amazon Mechanical Turk, only previous Netflix subscribers who canceled their subscriptions since April 1, 2019.

Sample size: 1,005

Sample details: Only US participants. Our sample has an appropriate distribution across age categories for streaming video users and representative gender distribution with 48% female and 52% male respondents. The fastest 5% of the sample were removed before analysis to ensure data quality (as they may have sped through without paying attention) resulting in a final sample size of N=1,005. Only mturk participants with a 99% or higher approval rating were permitted to take the survey.

Confidence Level: 95%; 3% margin of error

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