Magid Surveys Netflix Subscribers and Looks at Netflix's Challenging Prospects Ahead

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Sep 20, 2011, 11:23 ET

MINNEAPOLIS, Sept. 20, 2011 /PRNewswire/ -- The future looks even more challenging for Netflix than Wall Street currently estimates or Netflix's recent announcements suggest, based on a survey of 1,000 U.S. consumers, including over 700 subscribers and over 350 non-subscribers. The survey was conducted the week of August 22, 2011, right before the new price change.

The research also shows growing interest among Netflix consumers in the Redbox rental service for DVDs.

We have developed growth projections that suggest a more serious problem than Netflix's announcements suggest due to a number of consumers with only moderate satisfaction around their Netflix service and lack of satisfaction with the selection of the streaming content.

9% of current subscribers say they are going to cancel instead of switching to a new plan
An additional 7% of current subscribers say they will cancel, unrelated to the price change
Beyond the 16% likely to churn, another 14% say they are seriously considering cancelling

Redbox stands to benefit from Netflix churn – a majority of Netflix subscribers use Redbox.

"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," said Mike Vorhaus, President of Magid Advisors, a unit of Frank N. Magid Associates. "Netflix will need to improve the breadth and timeliness of their streaming content to re-build major consumer momentum."

One of the key problems for Netflix is that they are offering a very price sensitive product. If other competitors come into this space strong with better pricing or better selection of content, the Netflix value proposition will be under even more pressure.

The study also reveals that Redbox, operated by Coinstar, will definitely get a bump in increased rentals from Netflix consumers after the price increase.

Almost 60% of Netflix subscribers use Redbox. Almost 30% of them indicate that they will use Redbox more in the future due to the price changes from Netflix.

The Magid Netflix Study captures consumer attitudes, behaviors and intents that are highly relevant for those invested in the media industry. The study covers:

New proprietary growth estimates for U.S. subscribers of Netflix that are lower than current Wall Street growth projections.
Consumer sentiment on new pricing including which subscription plans they would select
Driving factors behind service satisfaction and Netflix value proposition
Intention to cancel Netflix service in the next 12 months due to pricing
Consumer segments most sensitive to pricing change
Consumer interest in subscribing to alternative online streaming video services
Overall satisfaction of DVD offerings compared to streaming offerings
Time spent watching streaming content compared to DVDs
Consumer interest in using movie kiosk services such as Redbox as a Netflix alternative

For more information contact:

Mike Vorhaus
President, Magid Advisors
Frank N. Magid Associates
[email protected]

About Frank N. Magid Associates, Inc.

Frank N. Magid Associates, Inc. is a leading research-based consulting firm that helps its clients become more profitable by solving problems and helping them take advantage of opportunities. We are unique because for 54 years we have carefully studied human behavior and how communication affects it. We possess an uncanny understanding of what and how marketing and communication will motivate people to behave in certain ways. This understanding provides us with a unique consumer lens through which we analyze and develop strategies.

We use this expertise and perspective to help clients across industries develop and market products and services that successfully change or adapt to consumer attitudes, thereby influencing behavior in ways that lead to optimized financial performance. Clients include leaders in their respective industries, including Google, The Walt Disney Company, Verizon Wireless, Electronic Arts, Best Buy, General Mills, Nestle, UnitedHealth Group, MetLife, Dr. Pepper/Snapple, and numerous others. Magid's 150 professionals demonstrate extensive experience in media, marketing, communications, product development, market research, operations, investment strategy and strategy consulting. We work with clients around the world from offices in New York, Los Angeles, Minneapolis, Dallas, San Francisco and Cedar Rapids, Iowa.

http://www.magid.com

SOURCE Frank N. Magid Associates