Analysts say Netflix should crack down on account sharing

Apr 22, 2013
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Analysts say Netflix should crack down on account sharing

Michael Pachter, an analyst for Wedbush Securities, states that around 10 million people are currently using Netflix's service without paying. He says that if Netflix were to crack down on these people and its account sharing policies, it could generate a ton of more profit. Pachter stated in an interview with Bloomberg that it's time for Netflix to "change".

Pachter isn't the only analyst who believes that Netflix can generate more money if it made a few changes to its policies. According to Heath Terry, an analyst for Goldman Sachs & Co., a pricing/policy change can increase revenue for Netflix by up to 5 percent per subscriber. Terry also mentions that Netflix's CEO, Reed Hastings, can offer a variety of different plans, such as charging extra to add new users to a Netflix account.

Hastings has thought about introducing family plans to Netflix, which would allows families to have more than two stream running at the same time. He stated that it would help families save money by not having to purchase separate Netflix accounts. but Hastings doesn't want to get into any price changes or policy changes with Netflix just yet. He says that Netflix is still recovering from its pricing fiasco back in 2011, when it increased its fees for video-streaming/DVD rentals to $15.98 a month from $9.99.

The analysts, however, believe that Netflix can do much better if it offers new account options. Terry states that with new account options, Netflix's subscriber base can increase to 53 million by 2017, which is 20 million more subscribers than the 33 million the service currently has. Regardless of whether or not account/policy changes would be beneficial to Netflix, Netflix is doing well, with its shares increasing 76% this year, showing that it doesn't need to implement any changes anytime soon.

[via Bloomberg]


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