This is stated by the investment bank Jefferies, which has produced a report in which they conclude that, despite the spectacular growth of Netflix in the stock market and in subscribers, there is still more margin to squeeze the money obtained by the subscriptions.
Netflix has a lot of market power
For this, Jefferies carried out three studies among key markets: United States, United Kingdom and India. The bank says that Netflix’s future growth will come through international markets, and it chose the United Kingdom and India because they represent two of the markets in which Netflix is growing the most, with 39 and 54%, respectively.
Thus, the report reveals that Netflix has high market power when it comes to determine the price of streaming platforms, and where 90% of subscribers in India and 70% of those in the UK could pay more. The growth margin in India is huge, with a large user base and where they have launched exclusive mobile-friendly plans to monetize as many users as possible.
In the United States, however, the price increase margin It is less because there is more competition, in addition to the fact that there is less possibility of growing with double-digit figures because they already have a spectacular user base in the country. Therefore, new price models, or directly increased, are one of the ways to increase the average income per user.
Netflix is the preferred streaming platform in almost all the countries in which it operates thanks to its extensive catalog and original content. 55% of respondents from all countries state that it is their preferred platform, where the next platform, be it Prime Video, HBO or others, was only chosen by less than 20%. The commitment to original content that the platform chose to follow a few years ago shows its fruits.
Netflix has no reason to raise the price today
However, although they affirm that Netflix has room to raise the price, the platform will not apply any increase in the short term due to the current situation in both the United States and the rest of the world with a slowdown in the economy.
In addition, the platform has experienced in these months a huge increase in the number of subscriptions, with almost 16 million more users in the first quarter of the year. In the UK, 62% of subscribers watch more than 10 hours a week, up from 59% in India and 38% in the United States, up from 32, 23 and 16% before the pandemic.
Another factor that can benefit Netflix is that, according to Gartner, 74% of companies will allow at least 5% of the workforce to work from home after the pandemic. The average American takes 54 minutes to get to and from work, and 36 minutes to lunch break, so it could take around an extra a day to view content at home.
In short, Netflix currently has no reason to raise the price of the subscription, but depending on how revenue advances in the next year, it could be an option to consider because it has scope to do so. At the moment, the subscription price is quite tight, and we can always get Netflix cheaper.