Key Findings:While the main metric of paid net adds may have fallen short, in many ways this has been a solid quarter for Netflix,
particularly in terms of retention. The effects of the ongoing extraordinary operating conditions caused by the global
pandemic are likely still benefitting the streamer.Several demand metrics relevant to subscriber retention, such as the demand decay rate, are trending upward. This shows
that Netflix is improving on measures that keep subscribers coming back for more. Netflix itself noted that “retention
remains healthy” in its shareholder letter.As we have previously revealed, the demand for the most popular original series on a platform (tentpole series) is a powerful driver of new subscribers: Demand for tentpole series in one quarter drives subscriber growth in the next. Our latest Q3 Netflix analysis shows that demand for Netflix’s tentpole originals fell in the second quarter which anticipated the Q3 miss in forecast
subscriber adds (chart 1). The subscribers miss was driven by weak subscriber acquisitions due to reduced demand for tentpole originals.
Chart 1
Our methodology:
Parrot Analytics works with the largest TV studios, networks and OTT platforms to enable better content decisions and we also partner
with Guinness World Records to certify their global TV records.
Here is an overview of our methodology:
We capture over 1 Billion new data points each day across the entire consumer activity spectrum, including video
consumption (streaming and downloads), social media engagement (hashtags, liking, sharing) and research actions (reading
about shows, writing about shows, etc.). In terms of downloading, just one of our many data sources, we hold the patent
for deriving media usage according to consumer global peer-to-peer (P2P) activity:
Our Demand Rank system ensures that the important demand signals are weighted more heavily than others (e.g. watching or
downloading a series). We use factors such as time as a key arbitrator, enabling us to filter out the “noise”, which
results in a demand metric that is more than a measure of “buzz” (which the industry, as you know, has had access to via
traditional social listening tools for many years now).
The more consumer effort required, the more importance is attached to each signal. Once all the signals are weighted and
combined, the audience demand for each show almost anywhere in the world can be compared with that of any other show
using our globally standardized metric.
How Parrot Analytics defines a digital original series: