METRICS

Although Netflix obtains paying subscribers through unique deals like bundles and discounts, these are the numbers you should use to calculate your metrics in this assignment:

• $12.99/month for a paid subscription * 12 = $155.88 annual revenue
• Cost to acquire and maintain each subscriber = $99 annually
• Annual Retention rate = 60%
• Annual Discount rate = 10%

Customer lifetime value (CLV) informs companies about how much a customer is worth to them. Its especially important for companies like Netflix, where they want customers to continue to subscribe to services. These metrics focus on the LONG TERM value a single customer brings to the company.

QUESTION #1: Calculate the the CLV for Netflix. Show your work.

You can calculate the Customer Lifetime Value using this formula:

CLV = (Average Profits per Customer per Period) (Retention Rate) 1 + (Discount Rate) - (Retention Rate)