As part of its crackdown on password sharing, Netflix Inc (NASDAQ:NFLX) recently introduced an option for users to pay an extra $7.99 per month to add an additional member to their account.
Analysts at Oppenheimer are a fan of this move, upping their price target for the streaming giant to $450 from $415 and reiterating an Outperform rating.
“Before the announcement, we conducted a survey of 1,800 US NFLX consumers indicating healthy propensity to pay for ‘remote’ users, with some abandoned users willing to pay for their own subscription,” the analysts wrote. “(Around) 80% of our respondents pay for NFLX, 48% supporting ‘free’ users outside their household, suggesting potential for (around) 36 millino new subs.”
Some 45% of respondents indicated a willingness to pay for remote users, and 70% indicated a propensity toward a $6.99/month ad-tier plan, the firm noted, and 30% of respondents that could lose “free” access plan to sign up for an account.
Oppenheimer estimates 48% of North America subscriptions equates to about 75 million accounts that could pay to add a user or get a new account.
“Supported by our proprietary survey, we believe that the launch of a lower-priced ad tier will accelerate subscriber growth, drive [average revenue per member], and slow subscriber churn,” analysts wrote. “Despite increased competition, Netflix remains the dominant streaming platform maintaining the largest market share of US TV viewership. In 2025, we are forecasting Netflix’s global advertising tier revenue at $6 billion, which will drive an incremental $5 billion of revenue.”
Shares of Netflix rose 1.6% Wednesday afternoon to $361.65.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
Follow him on Twitter @andrew_kessel