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Ampere: Netflix U.S. Customer Acquisition Costs Skyrocket


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Netflix’s net spend to acquire new customers in the U.S. is about $100 per subscriber, Ampere Analysis says, up from around $60 a few years ago.

The cost of international subscribers, meanwhile, has remained relatively flat at $40 at $45 for each new addition, Ampere adds.

Ampere says that 14 percent of Netflix spending is on marketing. The company spent almost $1.3 billion on advertising last year, divided equally between the U.S. and the international market, up from just under $1 billion in 2016 and $500 million five years ago.

“Rising marketing spend combined with falling subscriber growth mean than it takes Netflix 11 months to achieve payback on net new domestic customers,” Ampere reports. “In comparison, international subscribers cover their marketing costs within four months. Ampere Analysis believes that if international markets follow the same trajectory as the U.S., with increasing levels of marketing required to drive a steady rate of new customers, subscriber acquisition costs could rise to approaching one fifth of Netflix’s total costs.”

Richard Broughton, research director at Ampere Analysis, noted, “With declining domestic growth rates and spiraling acquisition costs, Netflix faces a very real set of challenges if it is to continue to command such a strong position. Our research show that while Netflix can continue to enjoy relatively low acquisition costs for international subscribers and a buoyant market keen to embrace SVOD, it cannot afford to take its eye off the ball in the domestic market, even momentarily. Its ability to grow ARPU will be critically important to manage long-term growth, domestically and abroad.”



About Mansha Daswani

Mansha Daswani is the editor and associate publisher of World Screen. She can be reached on mdaswani@worldscreen.com.

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