Still reeling from last year’s Netflix subscription price increase? You may need to open up your wallet yet again. A recent client note from Morgan Stanley suggests Netflix’s content strategy may warrant another price surge.
According to a CNBC report, those potential hikes are also thanks to Netflix’s high market value. In a Thursday note to clients, Morgan Stanley analyst Benjamin Swinburne raised his market price estimate for Netflix to $255 per share, up from $235. According to Swinburne, Netflix could squeeze another 4 to 5 percent revenue out of consumers. For U.S. consumers, that would equate to a 50-cent increase in fees for the service’s most expensive subscription price.
It should be noted that in his note to clients, Swinburne 4 to 5 percent a “conservative” estimate. Swinburne explained that Netflix’s value increased despite garnering a 10 percent increase in revenue per user. Additionally, Netflix has seen dramatic growth in a number of markets. Netflix is now streaming in 13% of Chinese homes with broadband access. Stateside, Netflix is now in roughly half of all U.S. households.
Can Netflix Sustain High Subscription Prices?
Many watchers may be wondering if Netflix can sustain its growth despite high prices. A Cosmopolitan article showed negative user reactions to the most recent price hike. Still, Netflix has seemed to weather complaints quite well. According to Swinburne, Netflix grew globally, “despite a generally higher price point for consumers.” He also added that the company “benefited more from Netflix original programming than prior markets in prior years.”
This means that despite consumer complaints, Netflix price increases have had little impact on its growth. As a result, Netflix may choose to raise subscription prices again, and quite possibly sooner than users expect.