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Netflix's (NFLX) Password Sharing Model Boosts Subscriber Base
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Netflix (NFLX - Free Report) announced its paid password-sharing model in the United States on May 23, notifying members that their accounts cannot be shared for free to users outside their households.
Per an article by Quartz, Netflix experienced an increase in subscribers during the four days following the announcement. The paid sharing model is an integral step to tackle widespread account sharing, which erodes the company’s ability to invest and improve content for paying members.
Netflix gained around 100K daily sign-ups on May 26 and May 27, higher than any other four-day period in the United States since 2019. Its average daily sign-ups reached 73K during that period, up 102% increase from the prior 60-day average.
Netflix already launched paid sharing model in Canada, New Zealand, Spain and Portugal in first-quarter 2023. Moreover, NFLX has plans to launch the paid sharing model in major markets like Brazil, Britain, France and Mexico.
Netflix’s shares have surged 42.5% year to date compared with the Zacks Consumer & Discretionary sector’s increase of 9.4% over the same time frame.
Netflix has been benefiting from a diverse content portfolio, cheaper ad-supported plans and a paid sharing initiative. Hits like The Night Agent, The Glory, Full Swing and That 90s Show helped the company win subscribers in the first quarter of 2023.
Its global paid subscriber base in the first quarter increased 4.9% year over year to 232.5 million.
Netflix’s multilinguistic content and its customer-centric focus has been a major growth driver in recent times as it continues to face stiff competition from the likes of Apple (AAPL - Free Report) , Warner Bros. Discovery (WBD - Free Report) and Disney (DIS - Free Report) in the saturated streaming market.
NFLX shares have outperformed Apple and Disney but underperformed Warner Bros. Shares of Apple, Disney and Warner Bros. have increased 39.3%, 5.8% and 46% year to date, respectively.
It has been focusing on its monetization initiative, which includes the new ad-supported plan that experienced higher user engagement. It is also upgrading its ads experience with more streams and improved video quality to attract a broader range of consumers.
Disney followed in the footsteps of Netflix to offer its ad-supported tier starting Dec 8, 2022. Its streaming service, Disney+, as of Apr 1, 2023, had 157.8 million paid subscribers compared with 161.8 million as of Dec 31, 2022.
Netflix’s Bright Prospects
Netflix’s strong content portfolio and the positive impact of password sharing are expected to help it win subscribers in the near term. It expects second-quarter 2023 revenues to increase 3.4% year over year to around $8.242 billion.
The Zacks Consensus Estimate for second-quarter revenues is pegged at $8.24 billion, indicating a 3.42% growth from the year-ago quarter’s reported figure.
The consensus mark for second-quarter 2023 earnings is pegged at $2.80 per share, up by a couple of cents in the past 30 days.
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Netflix's (NFLX) Password Sharing Model Boosts Subscriber Base
Netflix (NFLX - Free Report) announced its paid password-sharing model in the United States on May 23, notifying members that their accounts cannot be shared for free to users outside their households.
Per an article by Quartz, Netflix experienced an increase in subscribers during the four days following the announcement. The paid sharing model is an integral step to tackle widespread account sharing, which erodes the company’s ability to invest and improve content for paying members.
Netflix gained around 100K daily sign-ups on May 26 and May 27, higher than any other four-day period in the United States since 2019. Its average daily sign-ups reached 73K during that period, up 102% increase from the prior 60-day average.
Netflix already launched paid sharing model in Canada, New Zealand, Spain and Portugal in first-quarter 2023. Moreover, NFLX has plans to launch the paid sharing model in major markets like Brazil, Britain, France and Mexico.
Netflix, Inc. Price and Consensus
Netflix, Inc. price-consensus-chart | Netflix, Inc. Quote
Strong Portfolio to Aid Top Line
Netflix’s shares have surged 42.5% year to date compared with the Zacks Consumer & Discretionary sector’s increase of 9.4% over the same time frame.
Netflix has been benefiting from a diverse content portfolio, cheaper ad-supported plans and a paid sharing initiative. Hits like The Night Agent, The Glory, Full Swing and That 90s Show helped the company win subscribers in the first quarter of 2023.
Its global paid subscriber base in the first quarter increased 4.9% year over year to 232.5 million.
Netflix’s multilinguistic content and its customer-centric focus has been a major growth driver in recent times as it continues to face stiff competition from the likes of Apple (AAPL - Free Report) , Warner Bros. Discovery (WBD - Free Report) and Disney (DIS - Free Report) in the saturated streaming market.
NFLX shares have outperformed Apple and Disney but underperformed Warner Bros. Shares of Apple, Disney and Warner Bros. have increased 39.3%, 5.8% and 46% year to date, respectively.
It has been focusing on its monetization initiative, which includes the new ad-supported plan that experienced higher user engagement. It is also upgrading its ads experience with more streams and improved video quality to attract a broader range of consumers.
Disney followed in the footsteps of Netflix to offer its ad-supported tier starting Dec 8, 2022. Its streaming service, Disney+, as of Apr 1, 2023, had 157.8 million paid subscribers compared with 161.8 million as of Dec 31, 2022.
Netflix’s Bright Prospects
Netflix’s strong content portfolio and the positive impact of password sharing are expected to help it win subscribers in the near term. It expects second-quarter 2023 revenues to increase 3.4% year over year to around $8.242 billion.
This Zacks Rank #3 (Hold) company expects second-quarter 2023 earnings of around $2.84 per share. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for second-quarter revenues is pegged at $8.24 billion, indicating a 3.42% growth from the year-ago quarter’s reported figure.
The consensus mark for second-quarter 2023 earnings is pegged at $2.80 per share, up by a couple of cents in the past 30 days.