Analyst Says Netflix Should See Small Revenue Bump Charging for Password Sharing

Netflix Feb. 8 began charging subscribers in Canada, New Zealand, Spain and Portugal an additional monthly fee for sharing their password access to non-subscribers. Now, new data from Wall Street investment firm Loop Capital Markets suggests the move could produce an incremental revenue bump for the SVOD behemoth.

Loop Capital analyst Alan Gould

Citing an internal survey of 500 Netflix subscribers, analyst Alan Gould believes the change in strategy could bump up revenue by 3%, increase the number of paying subscribers 19%, and lead to a 27% rise in average revenue per user (ARPU).

Characterizing the new policy as Netflix’s “North Star,” Gould says the fiscal impact should be positive for the streamer’s bottom line going forward. Indeed, Netflix is charging non-paying members in Canada 50% of the paying sub’s monthly price. The percentage is slightly less in the other countries.

“Charging for passwords will enhance revenue,” Gould wrote in a note to investors.

The analyst doesn’t believe Netflix will start charging subscribers in the United States for sharing their passwords until at least the middle of the year, which he said would be enough time for senior management to assess initial data from the new rules implemented in Canada, Portugal, New Zealand and Spain.

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