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The secret to Netflix's total dominance

Ted Sarandos at Allen & Co. Sun Valley Conference, 2021
Netflix co-CEO Ted Sarandos has to be happy about the company's "churn" rate. It's the best in the business, according to data compiled by Antenna and shared with BI.Kevin Dietsch/Getty Images
  • Netflix is crushing its competitors when it comes to "churn."

  • That's the ratio of people who cancel their subscriptions each month vs. those who stay.

  • Starz has the worst churn rate, according to Antenna data shared with BI; Netflix has the best.

Netflix competitors have spent billions of dollars chasing the company. They're still nowhere near it.

On Tuesday, we saw a reminder of the gap between Netflix and its peers when it released earnings numbers showing a record spike in subscribers. The streamer now has 260 million paid subscribers and made about a billion dollars in profit last quarter — numbers none of its competitors can come close to.

But you don't need to focus on financials to see the gap between Netflix and its peers. Here's one easy way to visualize it: Look at Netflix's churn rate — the percentage of customers who quit each month — and compare it to the other streamers.

This data comes to us via Antenna, a company that tracks subscription services. And it shows that Netflix consistently has a churn rate of about 2%. That's way, way below all of its competitors, who at the moment have a weighted average of 5.3%.

Churn, obviously, tells you how satisfied customers are with the product. And it's particularly important for streamers since their customers have become increasingly likely to quit over the last year.

But even though Netflix has had blips, its churn rate has remained remarkably steady and well below anyone else. Meaning: No matter how often you hear people say they can't find something to watch on Netflix, they must be finding something to watch.

And they must be liking it because they keep their subscriptions.

None of its peers can say the same.

Read the original article on Business Insider