The Witcher, Netflix and Subscription Based Loyalty

Before you toss a coin to your Witcher, have you considered how many coins you have tossed to Netflix or any other streaming service for that matter? And why do you keep tossing them over? The answers might surprise you.

With the advent of Netflix and other streaming services such as HBO Max, Amazon Prime, and Hulu, just to name a few, it is easy to see how these platforms have completely revolutionized the silver screen and television as a whole. With Netflix in particular, evolving from a simple distribution company to developing/producing multiple TV series with a gold standard production house, it is no wonder that their 2020 annual revenue was valued at $25 Billion USD.

This from a marketing perspective raises several questions as to how can Netflix keep such a low churn rate and maintain the highest level of customer loyalty when it comes to the streaming services market. But before we get into that though, we need to provide a small amount of context.

As internet streaming and bandwidth capabilities have advanced it is clear to observe a paradigm shift that has occurred in the last decade, as more and more households are opting out of ‘cable or pay-TV’ subscription services (literally cutting the cable) and opting into digital streaming services. According to Observer, in 2020 alone, almost 6 million US households ‘cut the cord’ signifying this change, coupled with the pandemic it is clear that regular pay-TV services are facing an extinction-level event. Some have even argued that regular television is also beginning to hear its death rattle.

Furthermore, as the pandemic has had a major economic impact on families globally (not to mention the cinema-going experience), many are seeking frugal alternatives for their families (or themselves) to be able to supplement their entertainment requirements.

So how do they do it?

By just investigating and observing Netflix’s annual data it is no surprise that they are able to keep their churn rate at 2.4% compared to Hulu at 4.1% - which would be considered Netflix’s closest competitor. The main factors that drive this retention rate and consistently improve their customer loyalty are as follows:

Integration with technology

One could argue that Netflix’s power comes from its integration into technology such as smartphones, tablets, and computers. This allows the service to be portable and allows its users to be able to access the service virtually anywhere, as long as there is a stable internet connection. This is subsequently synergized when most telecommunication providers offer free streaming data on mobile and internet plans.

Cost-effectiveness and communication

Netflix’s pricing has always been one of its main pillars whereby its service still remains one of the most cost-effective on the market. This, coupled with its powerful e-mail and communication system (push notifications, e-mail reminders, etc), consistently keeps its users up to date, while also informing them of upcoming releases.

Recommendation Algorithm

If Netflix was to have an ace up its sleeve, it clearly is its extremely advanced and successful recommendation algorithm. This powerful tool keeps users consistently engaged and further helps reduce churn rates at unprecedented levels by recommending titles and other content.

Quality content and a diverse catalog

This seems like the most obvious answer but the proof is in the proverbial pudding. Netflix boasts a catalog of over 15,000 titles with subscription access to virtually a worldwide audience with 2000 of its own titles. With such a large repertoire there is simply something for everyone and one of the more successful Netflix shows being The Witcher, it’s no wonder.

Geralt of Netflix

It is clear to see that the recent release of the second season of the fantasy drama ‘The Witcher’ further complements the points mentioned above. It has completely dominated Netflix’s top ten charts for the week of 13-19th of December, upon its release with a recorded 142 million hours streamed in its first three days. Whilst it is still early days to rank all of season two’s views, looking back on season one, the statistics state that it has cleared over 541 million individual streams, making it the 5th most-watched TV program on Netflix.

'One of Netflix’s most powerful assets is its ability to hone in on its loyal customer base by creating content that is relevant, desired and most of all marketed correctly. This coupled with its established loyalty mechanisms and release date timing, especially around the holidays such as Christmas, it is no wonder programs such as The Witcher bring in so many views and keep their underlying customer base at the edge of their seats.' - Alexander Kubicki, Marketing Director for Sparta Loyalty.