Sun, Feb 1, 2015, 3:30 PM EST - U.S. Markets closed

Recent

% | $
Quotes you view appear here for quick access.

Netflix, Inc. (NFLX) Message Board

  • satrasal satrasal Jul 13, 2011 11:35 AM Flag

    street cancellation poll- nflx future revs

    http://www.thestreet.com/story/11182195/1/will-you-pay-more-for-netflix.html

    11% will pay more
    38% will opt for just streaming or just dvd
    51 % will cancel nflx

    How many of the 24 mil users might be affected?

    We know their retention for hybrid (streaming+dvd) was higher than streaming only which was higher than dvd only.
    We know arpu was $12.
    We know the "vast majority" of subs were streaming only at $8 or streaming + 1 dvd $10.

    Assuming 30% were stream only ($8), 50% were stream + 1 dvd ($10), and 20% were stream + 2/3/4 dvds (avg $18) we get an arpu of $12.

    The new model doesn't affect streamers only since their price remains the same.
    It doesn't affect the 20% who presumably didn't care about streaming except to lower their prices from an avg of $18 to an avg of $15 and impacts nflx by lower revs of $150 mil a year.

    So the question is what happens to the 12 mil susb who do the stream + 1 dvd and are upset about the hike.

    If half (6 mil subs) cancel altogether, nflx loses 720 mil revs/yr.
    40% (5 mil subs) opt for just stream or just dvd- nflx loses 120 mil /yr

    10% (1 mil subs) pay the extra $6 adding 72 mil revs a year.

    Net net, nflx loses 920 mil revs/yr- and does 2.5 instead of 3.4 billion revs.

    So we see a minimum 25% eps hit from what analysts currently model- 3.25 billion revs and $4.5 per share eps

    Also, nflx should see a deceleration of new adds to 75% of what it would have otherwise seen given that 50% of the hybrid plan folks would want to leave/not join.

    And if we see a spiral of desertion from nflx motivated by the social networking factor which was likely the reason why nflx saw explosive growth the last year, we could see a lot more that 25% deceleration. So why is the stock going up?

    Because nflx stock price had little to do with reality anyway?

    SortNewest  |  Oldest  |  Most Replied Expand all replies
 
NFLX
441.80-2.00(-0.45%)Jan 30 4:00 PMEST

Trending Tickers

i
Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.