Analyst investigates cancellation reasons

Improving Forecasting with Consumer Insights

Using SurveyMonkey Audience, a research analyst determined cancellation reasons and forecasted market share trends for Netflix (NFLX).

Background

Netflix (NFLX) is a popular streaming media service that gives users access to movies and TV shows online and by mail. Like any subscription service, Netflix’s cancellation rates go up and down. One equity research analyst turned to SurveyMonkey Audience to take a pulse on cancellation trends and see which other streaming services were eating into Netflix’s market share. He used SurveyMonkey Audience to create a high-quality survey and collect responses from a group of more than 350 U.S. adults.

Key Insights

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Content is key

The analyst wanted to know what would make Netflix subscribers likely to cancel, and what Netflix should do to retain those customers. 52% of subscribers who said they were likely to cancel in the next 3 months pointed to limited content availability as their main reason to end their subscription.

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Competitive threats

The analyst also wanted to know which other streaming services were the biggest threats to Netflix’s market share. While a lot of subscribers said they would not use another service if they cancelled their Netflix subscription, 26% said they would use Amazon (AMZN) Instant Video, and 24% said Hulu Plus was a possible alternative.

Putting Results Into Action

Netflix subscribers care about content and would be likely to cancel if the available options do not improve. Netflix should focus on improving and providing more content that subscribers want in order to decrease cancellation rates, and investors should monitor that activity to forecast a positive or negative position on future Netflix holdings. Amazon Instant and Hulu Plus also prove to be the biggest competition to Netflix, and big changes in those offerings could lead to significant disruptions in the streaming media industry and to Netflix’s market share.

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