JP Morgan: Netflix to Monetize 14 Million Shared Accounts in 2023

Netflix will monetize 14 million non-paying account users in 2023, a tally that should increase to 26 million by the end of 2024 and 33 million by the end of 2025, according to analysis from JP Morgan analyst Doug Anmuth.

Since launching the option this year that allows subscribers to share their Netflix accounts with non-paying members, the SVOD pioneer is attempting to curb a practice that impacts about 100 million of its global subscriber base.

Netflix subs can now add non-members for an additional $7.99 monthly fee, a move some observers believed would increase subscriber churn, or increase members who don’t renew their monthly subscription plan.

Instead, Netflix is eyeing tens of millions of dollars in new revenue, according to Anmuth.

Anmuth believes the new monetization will include a 50-50 split between new subscribers paying the additional fee and non-subs paying for access to a subscriber’s password. The latter user group does not count as an actual paid Netflix subscriber.

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“We believe that is playing out as Netflix has improved communications with account holders and password borrowers (as well as non-sharing members) and eased concerns related to access while traveling,” Anmuth wrote in a note.

The analyst was also upbeat on Netflix’s foray into an ad-supported subscription tier, which the streamer said had generated around 5 million active global users in the first quarter ended March 31.

Anmuth believes about 54% of new subscribers will opt for the $6.99 ad-supported tier this year and in 2024.

Analyst: Netflix to Add 4 Million Subs in Q1, Topping Projections

Netflix is projected to have added around 4 million subscribers worldwide in the first quarter (ended March 31) — topping company estimates of 2.5 million new subs globally, according to J.P. Morgan analyst Doug Anmuth, who cited data from Apptopia global downloads.

If correct, the additions would send Netflix’s global subscriber base above 226 million — tops for all SVOD services worldwide.

“Based on our discussions with investors, we believe expectations for Q1 net adds are 3 million before Russia [boycott], or 1 million — 2 million post Russia,” Anmuth wrote in an April 7 note.

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The analyst expects Netflix to add around 1 million subs in the current second quarter, ending June 30, which would fall below last year’s gain of 1.54 million subs. Anmuth contends Q2 is traditionally a slow period for Netflix, with potential new subscribers opting instead to travel rather than pay higher subscription fees.

At the same time, the analyst said Netflix is streaming new seasons of “Elite,” “Ozark,” “Stranger Things” and “The Umbrella Academy.” In addition, the second season of “Bridgerton” broke the record for first-week viewing of English-language programming, with more than 252 million hours streamed.

“Despite a muted first half of the year, we are positive on shares overall, and expect stronger subscriber trajectory in the back half [of the year], and beyond with greater distance from both the pandemic, this year’s early price increases, and increased contribution from the Asia-Pacific, Europe, Middle East and Africa regions,” Anmuth wrote.

Netflix reports Q1 fiscal results on April 19.

Analysts Say Netflix Will Miss Q4 Sub Growth Projection

Shares of Netflix dipped slightly Jan. 6 after two Wall Street analysts suggested the streaming behemoth could miss its fourth-quarter (ended Dec. 31, 2021) subscriber growth projection.

In a Jan. 6 note, J.P. Morgan analyst Doug Anmuth estimated the streamer will have added 6.25 million net new subs globally in the quarter when it reports financial results on Jan. 20. Netflix is projecting 8.5 million new subs added — a number that exceeds most of its competitors.

With the streaming pioneer firing on all cylinders, there are few metrics to critique the service on except subscriber growth — an easy target as the subscription VOD market reaches saturation in the United States.

WarnerMedia contends its HBO Max streaming platform was the top-growing service in 2021, ending the year with more than 73 million combined HBO and Max subs since launching in May 2020.

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The tally still trails Netflix’s market-leading global sub count of 213.5 million at the end of Q3 (Sept. 30, 2021), followed by Amazon Prime Video with 175 million, and Disney+ with 118 million.

“We believe fourth-quarter [subscriber] additions were lumpy as Netflix started the quarter with significant spike and buzz around ‘Squid Game,’ which was released in late September,” Anmuth wrote. “Download growth then slowed and ultimately declined into early December before picking up.”

Stifel analyst Scott Devitt also has sub growth concerns, compounded by what he claims were weaker Netflix app engagements in November and ongoing service price cuts in India — a market rival Disney+ dominates after acquiring local streaming service Hotstar in the 20th Century Fox acquisition.

Both analysts maintain buy ratings on the Netflix stock, while each trimmed the stock’s price targets, respectively. Indeed, Devitt reduced his sub growth projection from 10.1 million to 8.6 million — which exceeds Netflix’s estimate.

“Despite these concerns we believe the company executed well on its strategy [in the fourth quarter] releasing a slew of high-profile original content and making solid headway on its video games and visual effects initiatives,” Devitt wrote in a note.