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Besides its revenue and overall subscriber growth, another number that is increasing for Netflix is its free subscription count, which has more than doubled in the last year to 1.74 million.

Merriman Curhan Ford analyst Eric Wold chalks up the surge in free subscriptions to an increase in trial memberships offered with many third-party electronics, as well as the fact that Netflix has doubled its free trial period for new customers to one month.

Wold believes that Netflix’s conversion rate of free subscribers to paid subscribers, which he estimates at 93%, means that there is no need for concern about the increasing numbers of non-paying users. Said Wold:

“As those free subscribers convert to paying subscribers in the first quarter, Netflix will experience a surge in revenues and margins . . . We believe Netflix has been extremely successful in converting free subscribers into paying subscribers during the next quarter, which was partially evident by the better-than-expected 1Q11 guidance provided Jan. 26 as most of those year-end free subscribers would have already converted.”

How many of you have taken advantage of a trial subscription to Netfix and then decided to become a paying customer? Will Wold’s predictions pan out?

(via Home Media Magazine)

14 Responses to “Rise in Netflix Free Subscriptions a Cause for Concern?”

  1. Member [Join Now]
    ChadCronin [chadcronin]

    I did a free streaming only trial in december and decided to continue because it’s cheaper then movie channels and I use it more to watch older movies and tv shows. I get my new stuff from Redbox

  2. Visitor [Join Now]
    Wesley [visitor]

    I got the Netflix free trial and never even considered dropping it after my two weeks. That was back in 2004. I think they made back anything they lost by now :)

  3. Visitor [Join Now]
    Firstlawofnature [visitor]

    It costs less to offer a month of streaming for free than it does a two week trial by the mail for free.

    • Visitor [Join Now]
      Mike [visitor]

      So far, for Netflix that is the case. However that may not be the case for the consumer for long.

      ISPs are starting to adjust their pricing plans to a more metered approach. You pay for what you use. This will start happening more and more as video use starts to ramp up on the internet and using up more and more bandwidth that belongs to other companies and not Netflix.

      Netflix’s free distribution model isn’t going to last long term and they are delusional if they think it will. Companies are going to want to get paid for the services they provide.

      Canada’s ISPs have already won federal approval for such pricing and you know that the same thing is going to happen in the US. There is no reason that the ISP providers should subsidize Netflix’s business.

    • Visitor [Join Now]
      Firstlawofnature [visitor]

      Things may occur in the manner you predict but they could easily stay as they are now. If this was easy to do it would be turned on already.

    • Visitor [Join Now]
      Joe Schmuck [visitor]

      F-LAW,

      How’s your stock in in Coinstar doing now?

  4. Member [Join Now]
    richmoral

    I dropped Netflix after they announced the 28 day delay signing with the big studios. It was bad enough that New Releases were usually pending and I wasn’t getting the movies I really wanted. So bye bye went Netflix.

  5. Visitor [Join Now]
    miker [visitor]

    Yeah, they hooked me, too, on one of those 1-month free trials. I stayed on with DVD’s by mail and streaming, but use RedBox for new releases, as I’m pushed to the back of the line for new releases as a “heavy user.”

    • Visitor [Join Now]
      Barbara [visitor]

      We are considering trying Netflex free trial. What do you mean by being pushed to the back of the line for new releases as a “heavy user”? Is this for DVD’s by mail? Thanks

      • Visitor [Join Now]
        Jimbo [visitor]

        There is a science to getting latest releases from Netflix. Always mail them so that Netflix will receive the on Monday. I do this and always get the new releases. My children watch quite a bit of movies streamed. Never had a problem with quality due to bandwith. I have the lowest internet package with Comcast. Since the 28 day delay went into effect I rent less from Redbox and more from Family Video.

        • Member [Join Now]
          starfire008

          Yes – your observation is definitely correct – I know several people at work who make sure they mail to make sure Netflix gets the DVD on Monday – works for them every time.

  6. Member [Join Now]
    s142424

    We used the free trial but once we got shunted to the back of the line as a “heavy user” we moved on.

  7. Visitor [Join Now]
    Carole Shipton [visitor]

    We’ve had Netflix for a long time now. We got rid of our Comcast cable because there are six of us in the house and it would cost a fortune to get us all renting boxes.
    Netflix has been really good for us and we’ll continue to do business with them. The price increase wasn’t nice…but again…still cheaper than cable or other options. We are always looking for other options.
    We did have Hulu for a little while but didn’t like it. Lots of buffering and we really didn’t enjoy it as much as we do Netflix.

  8. Visitor [Join Now]
    Danofive0 [visitor]

    I have Netflix (4) at a timne DVD’s Love it. Fast turn around. Yes the price did go up a bit. But no Big EEE yet…
    So I will keep them… Be well and Rock on.. Best way!