Netflix (Nasdaq: NFLX) has been a stunt double for punching bags, laughingstocks, and butts of jokes over the past few months, but deep down inside we're still talking about a generally well-liked service.

Citi analyst Mark Mahaney reiterated his buy rating on Netflix yesterday, fueled partly by a commissioned survey of 3,500 respondents that showed there are still plenty of people who are satisfied by the service.

The survey wasn't entirely encouraging, though. A full 71% of those polled have no interest in learning what their Facebook friends are watching through Netflix -- something that the company has been pushing hard to make legal in this country.

It's also easy to become discouraged when just 10% of Netflix subscribers categorize their experience as "extremely satisfied" when that tally was at 18% back in December -- when things already seemed pretty bleak. However, when you tack on the 45% of the respondents who are "very satisfied" and the 36% who are "modestly satisfied," you're looking at a healthy 91% satisfaction rate.

That's not so bad. Is it?

Churn it up
Netflix abandoned its practice of publicizing its churn rate on a quarterly basis last year, making it harder to gauge subscriber satisfaction.

It's easy to see why Netflix would want to sweep that metric under the rug. As Netflix moves from being a disc-based rental provider to a streaming service, it's going to be a lot more tempting to cancel. Once viewers have gone through most of the licensed digital content that they're interested in checking out, canceling Netflix to return a few months later will save money and give the company time to restock its ever-changing streamed offerings.

However, the Citi survey itself is actually encouraging on that front. The number of subscribers who have no intention of bolting anytime soon has climbed from 46% to 53%. The number of respondents classifying Netflix as a "leading video destination" has gone from 27% to 30%.

Everyone knows that Netflix's digital vault is far from complete and sorely lacking new releases. Losing Starz last month sucked out a good chunk of the newer retail releases that populated the service. However, could couch potatoes be coming to the realization that no one's offering an "all you can eat" spread of eye candy as plentiful as Netflix?

Hunger games
The competitive landscape is changing quickly, but there really isn't a legitimate threat that's closing in on Netflix.

  • Time Warner's (NYSE: TWX) HBO has a great digital product in HBO GO -- and Netflix CEO Reed Hastings continues to strategically play up the premium movie channel as its biggest competitor -- but HBO costs a bit more than Netflix's $7.99 a month service. It also can't be purchased on a stand-alone basis, so it's considerably more expensive when one considers the cable or satellite television subscription that's required to make it happen. It features awesome proprietary shows and a fresh slate of content, but it's no Netflix.
  • Amazon.com (Nasdaq: AMZN) is the closest match at the moment with the instant streaming it makes available at no additional cost to Amazon Prime members paying $79 a year for free two-day shipping and monthly Kindle rentals. However, if Netflix's digital selection appears limiting, Amazon's is downright stifling. The ability to purchase new releases on a piecemeal basis does set Amazon's service apart, but it's still not seamlessly accessible on as many devices as Netflix.
  • Coinstar's (Nasdaq: CSTR) Redbox remains a wild card. The popular chain has served up 2 billion cheap rentals through its fleet of 35,400 kiosks, but it's set to team up with Verizon (NYSE: VZ) for a digital platform later this year. Between Redbox's real-world appeal and Verizon at the top of the wireless carrier heap, we can't underestimate this threat. If it can score a fair chunk of licensing deals, the marketing reach will be substantial.

As the competitors bulk up it will be interesting to see if Netflix can hold on to its existing subscribers, tack on new ones, and continue to build up its library. After the brutal summer of Netflix blunders, the service did begin growing its streaming subscriber base during the fourth quarter.

Absent official churn metrics, surveys and subscriber growth will have to do in gauging Netflix's effectiveness.

Stream on
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