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Jefferies analyst Brent Thill has predicted that Netflix could soon raise its prices, but the financial professional doesn’t believe that the cost uptick will prompt a substantial number of customers to cancel their subscriptions.
Thill recently expressed his stance on the prospect of a Netflix pricing hike as part of a broader analysis of the Los Gatos, California-headquartered company’s stock. The Wall Street expert indicated that just a $1 to $2 increase in monthly subscription fees (across all regions) could produce a roughly $500 million to $1 billion windfall for Netflix in 2021.
Thill also acknowledged that the boost might prompt some fans (particularly international viewers) to put their subscriptions on ice, but pointed to the COVID-19 pandemic and Netflix’s extensive library in predicting that most watchers will stick around. Additionally, the Jefferies higher-up doubled down on his “outperform” rating for Netflix and lifted his target price from $500 per share to $570. At the time of this writing, NFLX was trading for $493.42, up from yesterday’s close of $490.65.
Netflix has added a substantial number of new subscribers to its ranks on the year, besides setting multiple all-time-high stock-price records. So has Spotify, but hiking prices seems almost unthinkable for the streaming music platform.
Spotify has largely kept its monthly subscription cost fixed – despite having nearly 300 million monthly active users (MAUs) as of last quarter, encompassing about 130 million paid subscribers.
Though Netflix also competes with multiple high-profile streaming businesses – Hulu, Amazon Prime Video, and HBO among them – the inherent obstacles associated with competing against other platforms with virtually identical music offerings has long weighed on Spotify. (The Big Three labels, led by UMG, essentially did away with album exclusives a few years back.)
Monthly subscriptions for individuals begin at $9.99 on Amazon Music, Apple Music, Deezer, and TIDAL (Amazon charges Prime subscribers $7.99 per month to access Amazon Music, however).
Because of these bottom-line, uniform prices and relatively similar selections, raising monthly subscription fees could easily price a platform out of the market. Accordingly, today’s foremost music streaming services have taken steps to differentiate their products and more effectively compete with one another.
2020 has seen Apple Music, SiriusXM/Pandora, Spotify, and Amazon Music invest a substantial cumulative sum in podcasting, and we reported yesterday that an Apple Original Billie Eilish documentary, The World’s a Little Blurry, is set to release in February. Earlier this month, Amazon Music scored an exclusive 3D audio version of Taylor Swift’s Folklore – shortly before launching a new ad campaign in support of its HD music library.