Netflix Needs to Start Talking Churn Again

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Netflix soared 5% to hit another new all-time high yesterday, and maybe it's time that the leading video service begins reporting its monthly churn again.

Remember churn? This is the metric that measures how many of a service's users cancel in any given month. Sirius XM Radio reports it, letting investors know that it loses roughly 2% of its satellite radio subscribers in any given month. Several other premium entertainment and subscription services put the number out every quarter. 

Netflix does not. 

Netflix used to let investors know what the monthly defection rate was, but then online streaming got hot. Canceling a streaming $7.99-a-month service is a lot easier than kissing off a disc-based plan where there's always a DVD or Blu-ray either at your place or on the way.

The dot-com darling abandoned the practice of divulging its quarterly churn rate two years ago. It argued that it was not a relevant figure given the way that its model was moving away from mail order and toward digital subscriptions, but most skeptics figured that it was just Netflix trying to dust an unflattering metric under the rug.

If you have nothing nice to say, as Mama would say, don't say anything at all.

However, there are some indications that churn isn't so bad at Netflix that you would want to rinse your Reed out with soap. 

A year ago, a Citi survey of subscribers found that the number of Netflix members who had no intention of leaving the service anytime soon had climbed from 46% to 53% over the past year.

Yesterday, it was Janney Capital's time to wax positive. In a bullish note that's being credited for at least a chunk of the stock's 5% rise, Janney Capital's data is showing moderating domestic churn.

It's easy to see why folks are sticking around. Netflix continues to build out its digital catalog, and that now includes award-winning originals. Sure, it's as easy as it's ever been to cancel Netflix. It's just as simple to start an inactive subscription back up again. However, with a steady flow of content worth watching, it's going to be harder to justify letting it go.

If Netflix's churn was high, one would think that the competition would be benefiting from the migration. is Netflix's nearest rival in terms of serving up a digital smorgasbord. Its CEO, Jeff Bezos, is typically pretty darn chatty when his products and services are catching on. Why hasn't he offered up hard figures on the number of Amazon Prime subscribers streaming video that they don't even have to pay for through Amazon Prime Video?

What's Netflix hiding? We know it's doing well. We've seen the primetime consumption trends. Even a high monthly churn rate would be forgivable since overall subscriber growth continues to grow at a healthy clip.

There may very well come a day when Sirius XM decides to stop offering up its monthly churn rate. Maybe the satellite radio giant will argue that it's not a fair measure as it fleshes out its online platform -- just like Netflix. However, investors would see right through that, just as they saw right through Netflix's move two years ago.

How cool would it be if we got that metric back and decided for ourselves how relevant it was in assessing Netflix's prospects? What are you waiting for, Netflix? Just do it. Prove Mama wrong.

As the world churns
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Longtime Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends and owns shares of and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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