More Viewing Hours Due to COVID-19 Won't Benefit Netflix, Says Needham
Contrary to popular belief that Netflix will be a “beneficiary” of COVID-19 because audiences will spend more time at home watching, Needham thinks the outbreak is “bad news” for the streaming service, said a Tuesday research note. Netflix charges a…
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fixed monthly fee, “and does not benefit economically from additional viewing hours,” it said. The fixed price is $9-$16 monthly in the U.S. Netflix needs to cut its monthly fees to $5-$7 a month to compete with new streaming competitors at that price point, the analyst said. Subsidizing that with a new “ad-driven tier” means “more viewing hours for any reason would allow NFLX shareholders to participate in revenue upside,” the firm said. Needham worries overseas subscription and revenue growth “are increasingly at risk as COVID-19 spreads,” because Netflix is “a luxury at a time when paychecks from employment may have stopped.”