Netflix Inc., the online movie DVD rental site, more than doubled its subscribers in the past year to 742,000, the company reported today. A full 95% were paying subscribers; the balance were free, 30-day trial subscribers. San Francisco continues to be Netflix’s primary market, where 3.5% of households are subscribers. In the rest of the country, Netflix’s penetration rate is 0.63%.
Average monthly churn for the third quarter of 2002 was 7.2%. This compares to average monthly churn of 6.7% in the prior quarter, 7.2% in the first quarter of 2002, and 6.5% in the third quarter of 2001. The company defines churn as free trial subscribers as well as paying subscribers not renewing their monthly subscription service. The company attributes the increase in churn to making it easier for subscribers to cancel their service online instead of having to call an 800 number during regular business hours. "To grow a large business, you have to do right by subscribers and that includes allowing subscribers to cancel, if they so desire, with a minimum of hassle," said Netflix CEO Reed Hastings.
Netflix launched in 1998. It offers unlimited DVD rentals for $19.95 a month. DVDs are delivered directly to the subscriber's address by first- class mail from 11 distribution centers throughout the United States.
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