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)