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Netflix and Customer Acquisition

While in London earlier this summer watching TV and trying to get over jet lag, I was treated to many Netflix ads.

That focus on customer acquisition has started to pay off: Netflix this week announced that they have signed one million subscribers in the UK and Ireland in the first six months of the service's availability.

While we don't yet know the lifetime value of these cohorts, data in the US suggests an average lifetime of about 25 months. If we assume this to be true in the UK/Ireland as well then at £5.99 per month that would imply average revenue per subscriber of about £150. I'd love to know what it cost Netflix to acquire those million customers, but it had better be significantly less than £150M to make this worth Netflix's while. Of course a huge variable that will influence that lifetime number is Netflix's ability to obtain greater access to content from the large Hollywood studios. Currently that content is available only to BSkyB subscribers and will likely influence subscriber retention if Netflix can't obtain that content over time.

We focus our time and energy at Vindicia on helping our digital clients maximize customer acquisition, retention and customer lifetime value via our CashBox solutions. To that end, here's a great webinar that discusses three straightforward ways to increase the lifetime value of your subscribers and a white paper that discusses best practices around customer acquisition.

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Analytics and Customer Retention

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