New Survey from Magid Advisors Evaluates Attitudes Of Netflix Subscribers and Looks at The Company's Challenging Prospects Ahead: Subscriber Exodus May Continue — And Redbox Is Reaping The Rewards

The future looks even more challenging for Netflix than Wall Street currently estimates, or the company’s recent announcements suggest, based on a new survey from research-based consulting firm Magid Advisors. The firm has 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. 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, according to the survey findings. The research also shows growing interest among Netflix consumers in the Redbox rental service for DVDs. “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, in a news release. “Netflix will need to improve the breadth and timeliness of their streaming content to re-build major consumer momentum.”

The survey of 1,000 U.S. consumers, including over 700 subscribers and over 350 non-subscribers, was conducted the week of August 22, 2011, right before the new price change. Among the findings:

  • 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.

  • 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

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