Netflix subscription model keeps Americans happy

A new study by The NPD Group revealed that there are more subscribers to Netflix today than ever before. This research comes on the anniversary of the failed launch of the company’s Qwikster offshoot, which was meant to build off Netflix’s existing successful subscription business model.

“Qwikster came in the wake of several price increases and changes to the service offering that were met with general skepticism from subscribers,” said Russ Crupnick, senior vice president of industry analysis for The NPD Group.

Despite the ironic anniversary, The NPD Group revealed that approximately one in every four U.S. households now subscribes to Netflix. The growing number of users suggests that consumers are finding the subscription commerce model appealing, as the strategy enables people to invest smaller recurring payments over time instead of large upfront fees.

How Netflix satisfies customers
Prior to the announcement of raised prices last year, Netflix had an extremely high customer satisfaction rate, as 82 percent of subscribers said the company provided “excellent” or “very good” value. After the announcement, however, only 63 percent of customers said they were happy with Netflix’s service, which is excluding a significant number of subscribers who dropped the service altogether, The NPD Group said.

Nevertheless, the success of the subscription business model is helping to boost satisfaction once again, even in the physical disc rental market. The study revealed that roughly three-quarters of subscribers are happy with Netflix’s DVD rental service, which may suggest that Americans are over last year’s debacle.

By using a subscription business model, Netflix is able to meet specific user demands and appeal to a wide range of consumers, which will help boost adoption of the service.

“Netflix has critical advantages in the realm of digital video rentals, including the massive subscriber base, solid value perceptions among customers and users who appreciate the brand’s linkage to multiple devices and platforms,” Crupnick said. “On the other hand, these advantages can only be exercised if the content continues to excite current subscribers and incite new ones.”

By leveraging an innovative subscription management platform, companies like Netflix may be able boost user satisfaction by having the unique ability to monitor customer usage more effectively. As a result, decision-makers can make on-the-go changes to enhance client experience.