eDatasource Netflix Insight May-July 2012

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eDatasource Netflix Insight May-July 2012

  1. 1. Netflix Insight Report May - July 2012
  2. 2. ContentsSummary ............................................................................................................................................................ 3Methodology ...................................................................................................................................................... 4About eDataSource ............................................................................................................................................ 4Disclaimer ........................................................................................................................................................... 5Netflix Subscriber Acquisition: One Year Weekly Trend ................................................................................. 6Netflix Joins and Cancels Performance ............................................................................................................. 7Netflix Free Trial Subscribers Performance ...................................................................................................... 8 - Free Trial Subscribers Index................................................................................................................... 8 - Percentage of Free Trial Subscribers Converting to Paying Subscribers ............................................... 8Plan Chosen by New Subscribers ...................................................................................................................... 9 - Type of Plan New Subscribers Choose .................................................................................................. 9 - Monthly Percentage of Type of Plan Chosen by New Subscribers........................................................ 9Plan Switching by Existing Subscribers ........................................................................................................... 10 - Monthly Plan Switched Index .............................................................................................................. 10 - Type of Plan Existing Subscribers Switched To from May-July............................................................ 11 - Monthly Percentage of Type of Plan Switched To by Existing Subscribers ........................................ 11Netflix Top 20 DVD Rentals ................................................................................................................... 12Netflix Facebook Performance .............................................................................................................. 13Netflix Twitter Performance ................................................................................................................. 14Appendix: Netflix Plan Types Defined...................................................................................................... 15eDataSource Proprietary & Confidential 2
  3. 3. SummaryOnce the up-and-coming contender of the DVD rental business, Netflix has changed the home moviemarket forever. Their once ubiquitous red envelopes were a secret weapon in knocking out the reigningmovie rental champion, Blockbuster, and they aggressively pursued flat-rate online streaming for the massmarket. Their early gambles paid off, and in early-2012, the company boasted over 24 million U.S.subscribers, and their online streaming service represented over 30% of all U.S. Internet downstreambandwidth traffic during peak periods (October 2011, Sandvine).Despite their enormous success, Netflix has struggled in the past year.In July 2011, Netflix announced a price hike and the split of their online streaming and DVD subscriptionservices. Additionally, they announced they would establish an entirely new brand, Qwikster, to handle theDVD subscription service. Customers were outraged and took to social media to vocalize their discontent.Netflix backtracked, but the damage was done. In the quarter following, Netflix lost over 800,000subscribers, and, even more dramatically, the stock lost 80% of its value from July 2011 to August 2012.What is happening today?As the world’s largest paid Internet subscription service, it’s worth following closely.This eDataSource report focuses on the details and intricacies of the Netflix business. Through an innovativepanel-based process, eDataSource has estimated a wide variety of business indicators, including: - Number of joins and cancels trended over the past year - Overall growth by month (index) - Free trial subscriber acquisition performance and conversion rate to paid - Type of plan chosen by new subscribers - Trend of subscribers switching subscription plans - Top DVD rentals in the past six and three months - Social media performance of Netflix on Facebook and TwitterPlease note: this report focuses on the U.S. business only. For more information on eDataSource’s products and services, including customized eCommerce monitoring reports and data, please contact us at sales@edatasource.com, or via phone at 800-761-6580. Visit our website at www.edatasource.comeDataSource Proprietary & Confidential 3
  4. 4. MethodologyeDataSource utilizes its proprietary email analytics capability and a panel of ~800,000 consumers to provideunique insights into consumer purchasing trends by examining online purchase confirmations delivered byemail.eDataSource has conducted detailed analyses of the sales and subscription rates at Amazon.com,Walmart.com, iTunes, Barnes & Noble, Netflix, Staples, Office Depot, Gilt, Ideeli, PayPal, OpenTable andothers using anonymized data from more than half a million online purchase and subscriptionconfirmations over the past six months.The following Netflix report is based on the analysis of nearly 8,000 anonymized Netflix Join, Cancellationand Account Update emails from eDataSource’s proprietary panel during the May through July 2012 timeperiod.The primary analyses contained in this report include a whole year weekly trend of Netflix joins and cancels,monthly joins and cancel performance, free trial subscription performance, type of plan chosen by new andexisting subscribers, top rented movies, as well as Netflix performance on Facebook and Twitter.In order to obtain the conversion rate of free trial subscribers to paid subscribers, we monitored over 1,000free trial subscribers who joined between April through June and tracked their cancellation date throughJuly.In order to obtain Netflix’s performance on Facebook and Twitter, we utilized our proprietary tool, EDSAnalyst, to monitor Netflix’s Facebook and Twitter accounts from May through July 2012.About eDataSourceFounded in 2003, eDataSource (www.edatasource.com) is the worldwide leader in competitive intelligencefor email, social media and ecommerce activity, based on active monitoring of more than 800,000consumer inboxes and 9,000 brands. The company provides strategic analytics products and services foronline marketers, publishers and their service providers.For more information on eDataSource’s products and services, including customized eCommercemonitoring reports and data, please contact us at sales@edatasource.com, or via phone at 800-761-6580.eDataSource Proprietary & Confidential 4
  5. 5. DisclaimerAll material contained in this report is property of eDataSource, Inc. (“eDataSource”) unless otherwiseindicated. This report is proprietary, confidential and provided for the exclusive use of the recipient. Noportion may be directly or indirectly copied, published, reproduced, modified, displayed, sold, transmitted,or redistributed in any medium without the express prior written consent of eDataSource. Anyunauthorized use of the content of this report is strictly prohibited.This report is intended for informational purposes only. eDataSource provides the information and datapresented herein on an “as is,” “as available” basis, without representations or warranties of any kindwhatsoever, expressed or implied. All statements and figures in this report are eDataSource estimates. Theinformation in this report may be incomplete and may not contain all material information relating to thesubject matter of the report. eDataSource does not provide any information or make any representation orwarranty on behalf of the companies that are the subject of this report and this report has not beenauthorized or approved by said companies.This report reflects the results of our research as of the date of this report. Our research results are subjectto change at any time as new or additional data and information is received and analyzed. eDataSourceundertakes no duty to update this report, or to provide supplemental information to any client receivingthis report, absent a specific arrangement to the contrary between eDataSource and individual clients,which arrangement may specify different frequency and depth of analysis and update commitments basedon levels of service and fees selected by clients.This report is provided solely to clients of eDataSource, each of whom assume all risk and liability withregard to any use or application of the data included herein. In no event shall eDataSource or its officers,directors, affiliates, shareholders or employees be liable for any damages that are directly or indirectlyrelated to this report.eDataSource Proprietary & Confidential 5
  6. 6. Netflix Subscriber Acquisition (Weekly Trend) Joins and Cancels Index Price Increase Joins Cancels 2.00 Announcement Directly Sign up for a DVD only plan Redbox price increase Feb, 16 2012 July 12, 2011 1.80 announced and put into effect Oct 31, 2011 Netflix reaches 24MM 1.60 domestic streaming 1.40 members 1.20 1.00 0.80 0.60 Price increase goes into effect for existing customers. Sept 1 "Apology" 0.40 and Qwikster announcement Have an extra DVD on us 0.20 broadcast to customers. and Give the Gift to Netflix campaigns Sept 18, 2011 Dec 13 & Dec 15 2011 0.00 * Index Baseline: Average number of cancellations for the entire year.Key AnnouncementsJuly 12, 2011 – “Netflix Raises Price of DVD and Online Movies Package by 60%” (The New York Times).Sep 18, 2011 – “Netflix Apologizes, Renames By-Mail Business Qwikster -- But Keeps Price Hike” (Reuters).Oct 31, 2011 – “Redbox Price Hike Could Dodge Nexflix Outrage” (TheStreet.com).Feb 16, 2012 – “Now You Can Sign Up Directly for a DVD Only Plan” (Netflix US & Canada Blog).July 24, 2012 – Netflix announces “24 million domestic streaming members”eDataSource Proprietary & Confidential 6
  7. 7. Netflix Monthly Joins and Cancels Performance Monthly Joins and Cancels Index Net Growth Index Joins Cancels1.40 2.501.30 2.23 2.001.201.10 1.501.000.90 1.000.80 0.690.70 0.500.60 0.07 0.00 May June July May June July % Change from % Change from Net Growth Joins Index Cancels IndexMonth Previous Month Previous Month IndexMay 1.03 -5.8% 1.02 24.8% 0.07June 1.16 13.1% 0.96 -6.3% 2.23July 1.08 -6.9% 1.02 6.4% 0.69 Percentage of Joins vs. Cancels % of Joins % of Cancels 100.0% 80.0% 45.2% 47.8% 49.8% 48.5% 60.0% 40.0% 52.2% 50.2% 54.8% 51.5% 20.0% 0.0% May-July May June JulyFor the entire period, Netflix is adding 2.2% more new subscriptions than cancelations. With bothhigher join rates and lower cancelations, June was the strongest acquisition month of the previousthree.eDataSource Proprietary & Confidential 7
  8. 8. Netflix Free Trial Subscribers Performance Free Trial Subscriber Index and Conversion Rate 1.20 100.0% 1.15 90.0% 80.0% 1.10 Conversion Rate (%) 70.0% 1.05 60.0% Index 1.00 50.0% 0.95 40.0% 30.0% 0.90 20.0% 0.85 10.0% 0.80 0.0% April May June July Conversion Rate Index Join Month Free Trial Subscriber Index Conversion Rate (%) April 1.04 89.7% May 0.97 86.0% June 1.05 90.4% July 0.94 -Over the previous three months, Netflix has maintained the number of free trials in a relativelytight range of ~+/- 5%, and has maintained a high conversion rate to paying subscribers ofbetween ~85-90%.eDataSource Proprietary & Confidential 8
  9. 9. Plan Chosen by New Subscribers Percentage of Plan Chosen by New Subscribers in May-July 6.04% Unlimited Streaming plan OR 1 DVD out at-a-time (Unlimited) plan Unlimited Streaming + 1 DVD out at-a-time (Unlimited) plan 93.96% Unlimited Streaming plan OR 1 DVD out Unlimited Streaming + 1 DVD out at-a- at-a-time (Unlimited) plan time (Unlimited) plan 100.0% 10.0% 98.0% 8.0% 96.0% 6.0% 94.0% 4.0% 92.0% 2.0% 90.0% 0.0% May June July May June July Value ($) Plan May June July May-July Unlimited Streaming plan OR 1 DVD out at-a- $7.99 92.6% 94.8% 94.4% 94.0% time (Unlimited) plan Unlimited Streaming + 1 DVD out at-a-time $15.98 7.4% 5.2% 5.6% 6.0% (Unlimited) planNew subscribers start out with the basic offered plan--either unlimited streaming or 1 DVD out at-a-time—94% of the time.eDataSource Proprietary & Confidential 9
  10. 10. Monthly Plan Switched Index Plan Switched Index 1.20 1.15 1.10 1.05 1.00 0.95 0.90 0.85 0.80 May June July Month Index Growth from Previous Month May 1.08 9.17% June 1.00 -6.87% July 0.92 -8.20%Over the period, the number of subscribers switching their plan has steadily decreased. This is furtherevidence that Netflix is making headway toward a single, simplified service offering of unlimited onlinestreaming.eDataSource Proprietary & Confidential 10
  11. 11. Type of Plan Switched To by Existing Subscribers Percentage of Plan Switched To in May-July Unlimited Streaming plan 3.0% 11.8% Unlimited Streaming + 1 DVD out at-a-time (Unlimited) plan 6.0% 1 DVD out at-a-time (Unlimited) plan 47.9% Unlimited Streaming + 2 DVDs 6.8% out at-a-time (Unlimited) plan 2 DVDs out at-a-time 9.3% (Unlimited) plan 1 DVD out at-a-time (2 a month) plan 15.1% Other PlansValue ($) Plan May June July May-July $7.99 Unlimited Streaming plan 47.3% 53.3% 42.9% 47.9% $15.98 Unlimited Streaming + 1 DVD out at-a-time (Unlimited) plan 13.0% 15.6% 17.0% 15.1% $7.99 1 DVD out at-a-time (Unlimited) plan 9.9% 9.0% 8.9% 9.3% $19.98 Unlimited Streaming + 2 DVDs out at-a-time (Unlimited) plan 6.1% 5.7% 8.9% 6.8% $11.99 2 DVDs out at-a-time (Unlimited) plan 6.1% 4.1% 8.0% 6.0% $4.99 1 DVD out at-a-time (2 a month) plan 1.5% 1.6% 6.3% 3.0% - Other Plans 16.0% 10.7% 8.0% 11.8%When subscribers switch their plans, nearly 48% opt for unlimited streaming without a DVDcomponent.eDataSource Proprietary & Confidential 11
  12. 12. Top 20 DVD Rentals Feb-July 2012 May-July 2012Rank Movie Rank Movie 1 Mission: Impossible - Ghost Protocol 1 Mission: Impossible - Ghost Protocol 2 Contagion 2 We Bought a Zoo 3 Tower Heist 3 Tower Heist 4 Real Steel 4 Immortals 5 Hugo 5 The Iron Lady 6 Bridesmaids 6 Abduction 7 We Bought a Zoo 7 Red Tails 8 Immortals 8 Contraband 9 Abduction 9 J. Edgar 10 The Iron Lady 10 Real Steel 11 Drive 11 The Whistleblower 12 Cowboys & Aliens 12 Sherlock Holmes 13 Water for Elephants 13 Hugo 14 50/50 14 Tinker, Tailor, Soldier, Spy 15 The Help 15 Jack and Jill 16 Sherlock Holmes 16 Gone 17 The Ides of March 17 In Time 18 The Descendants 18 Extremely Loud and Incredibly Close 19 Midnight in Paris 19 My Week with Marilyn 20 Friends with Benefits 20 The SmurfsDVD customers gravitated toward big-budget Hollywood action and adventure titles over the pastsix months with Mission Impossible – Ghost Protocol, Tower Heist, Real Steel, Immortals andAbduction all residing in the top ten for the past three and six months.eDataSource Proprietary & Confidential 12
  13. 13. Netflix Performance on Facebook Netflix Facebook Performance 1.40 2000.00 1827.91 Average Number of Likes/Comments 1800.00 1.20 1458.20 1600.00 1.00 1400.00 FB Post Index 0.80 1047.26 1200.00 1000.00 0.60 800.00 0.40 600.00 226.70 400.00 0.20 176.48 120.85 200.00 0.00 0.00 May June July Average Like per Post Average Comment per Post FB Post Index Average Like Average Comment FB Post Index Month per Post per Post May 0.86 1458.20 226.70 June 1.16 1047.26 120.85 July 0.99 1827.91 176.48Netflix maintains an active Facebook presence. In June, though the number of posts was thehighest, the average likes and comments per post fell to their lowest point over the three monthperiod.eDataSource Proprietary & Confidential 13
  14. 14. Netflix Performance on Twitter Netflix Twitter Follower Trend 195 Number of Followers (Thousands) 190 185 180 175 170 165 160 155 150 145 Netflix Twitter Performance 1.40 10.00% Monthly Follower Growth (%) 1.20 8.00% 1.00 Tweet Index 0.80 6.00% 0.60 4.00% 0.40 2.00% 0.20 0.00 0.00% May June July Monthly Growth of Twitter Followers (%) Tweet Index Monthly Growth of Tweet Index Month Twitter Followers (%) May 0.90 3.39% June 0.90 4.87% July 1.20 7.32%On Twitter, Netflix showed an accelerated growth of followers, with sequential gains of 3.4% to4.9% to 7.3% on a monthly basis.eDataSource Proprietary & Confidential 14
  15. 15. AppendixNetflix Plans DefinedMonthlySubscriptionFee ($) Plan$29.98 Unlimited Streaming + 4 DVDs out at-a-time (Unlimited) plan$15.99 3 DVDs out at-a-time (Unlimited) plan$23.98 Unlimited Streaming + 3 DVDs out at-a-time (Unlimited) plan$17.98 Unlimited Streaming + 1 DVD out at-a-time (Unlimited) (including $2.00 for Blu-ray) plan$51.98 Unlimited Streaming + 8 DVDs out at-a-time (Unlimited) plan$22.98 Unlimited Streaming + 2 DVDs out at-a-time (Unlimited) (including $3.00 for Blu-ray) plan$40.98 Unlimited Streaming + 6 DVDs out at-a-time (Unlimited) plan$21.99 4 DVDs out at-a-time (Unlimited) plan$45.98 Unlimited Streaming + 7 DVDs out at-a-time (Unlimited) plan$32.99 6 DVDs out at-a-time (Unlimited) plan$5.99 1 DVD out at-a-time (2 a month) (including $1.00 for Blu-ray) plan$37.99 7 DVDs out at-a-time (Unlimited) plan$52.99 8 DVDs out at-a-time (Unlimited) (including $9.00 for Blu-ray) planeDataSource Proprietary & Confidential 15

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