Netflix is offering standard video streaming service

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Reference no: EM131326853

• Netflix is offering standard video streaming service for $10/MONTH. For simplicity, let us assume

• (1) the price does not change in the future

• (2) the marginal cost of serving each customer and the cost of retention are 0

• (3) the customer acquisition cost is the ONE MONTH of free trail

• (4) discount rate is 10% (per YEAR)

• (5) the YEARLY retention rate is 70%

• Please compute the Customer Lifetime Value

• Suppose Netflix issues a $10 rebate every 12 months to retains customers, and the retention rate rises to 80%. Is the Customer Lifetime Value increased or decreased?

Reference no: EM131326853

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