Netflix CFO: One-third to 50% of subscribers come back after churning

Netflix living room couple

Netflix was stung by “unexpectedly” high customer churn during the second quarter but, according to CFO David Wells, the SVOD giant sees many of those customers returning.

Speaking at the Goldman Sachs Communicopia Conference, Wells said the percentage of customers who rejoin the service is “fairly high,” around one-third to 50 percent.

“We get a fair number back. That’s the headline,” said Wells.

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Likely due to Netflix ditching grandfathered subscription prices, the service added just 160,000 new subscribers in the U.S. during the second quarter, falling well short of its forecast of half a million signups. Internationally, Netflix added 1.52 million new customers, below its expectations of 2 million.

Right now, Netflix says it has 83 million subscribers globally and that it is still not in China, Syria and other countries where it’s not allowed to be. And, according to new comments from Netflix CEO Reed Hastings, the service is still struggling to enter the market in China.

Hastings told reporters that Netflix has made no progress in obtaining a government license for its service in China, according to Reuters.

As subscriber growth both internationally and in the U.S. slows, Netflix could be looking toward more MSO set-top integration deals to get its service in front of more consumers.

Netflix recently announced two big MSO deals with Liberty Global and Comcast, and the company sees those agreements as mutually beneficial. As Wells explained, cable providers have come to the conclusion that it’s better to have Netflix on their device and keep their subscribers in their technical ecosystem. For Netflix, Wells said the company is agnostic as long as it’s convenient and not a negative experience for consumers.

Despite the need for renewed customer growth, Netflix has seen its revenue, both in the U.S. and internationally, rise in its most recent quarter, likely due in part to increases in pricing.

Wells said that, at the macro level, Netflix thinks it can slowly continue to raise revenues over time as it adds more value and more content. He said Netflix will continue trying to differentiate itself by pushing more toward a 50-50 balance of original and licensed content.

Wells added that Netflix is staying very active in pursuing licensed content, even as it becomes potentially more expensive. “In a vacuum, we’d be playing less. But there’s no such thing as a vacuum. But we’re competitive in the hunt,” said Wells.

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Netflix subscriber churn 'unexpectedly' higher as users react to end of grandfathered rates

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