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Netflix (NFLX) Testing New Features Regarding Account Sharing

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Netflix NFLX is testing new features like charging extra fees for sharing of accounts outside of a person’s household, according to a Reuters report. The company is working on another feature that will enable members of basic standard or premium plans to transfer profile information to a new account, such as viewing history and personalized recommendations.

The company is currently testing the features in Chile, Costa Rica and Peru before making the changes in other parts of the world.

Netflix’s current terms and services state that the account can only be used for personal and non-commercial use and only between household members. However, password sharing is widespread among users beyond the household, which has been negatively impacting subscriber growth amid stiff competition.

Netflix’s key competitors include Disney’s DIS Disney+ and Apple’s AAPL Apple TV+.

Netflix, Inc. Price and Consensus

Netflix, Inc. Price and Consensus
Netflix, Inc. Price and Consensus

Netflix, Inc. price-consensus-chart | Netflix, Inc. Quote

New Features to Drive Subscription Growth

In the fourth quarter of 2021, Netflix beat earnings and revenue estimates, as well as expectations for user numbers, but it quietly conceded that streaming competition has begun to impact subscriber growth.

First-quarter 2022 subscriber addition rate is expected to remain muted due to the lack of content, stiff competition and macro-economic impact of COVID-19 in several parts of the world.

Netflix recently hiked price of the standard plan from $13.99 to $15.49 in the United States and Canada, which might have proven to be a risky gamble.

However, Netflix concurrently reduced subscription costs in India across all the plans to attract more subscriptions while fending off local and international competitors.

Netflix’s new features to charge extra for sharing of account outside of household will compel users sharing a platform and not adhering to the company’s terms and policies to create their own accounts, thus increasing the subscription base.

In the year-to-date period, Netflix shares have tumbled 40.7% compared with the Zacks Broadcast Radio and Television industry’s and the Zacks Consumer Discretionary sector’s decline of 26.4% and 17.8%, respectively.

Netflix’s underperformance is primarily attributed to stiff competition in the streaming space. Disney benefits from the growing popularity of Disney+, owing to a strong content portfolio and a cheaper bundle offering, which makes it a direct threat to Netflix.

The service offers nearly 700 movies and 11,700 episodes of television shows from brands such as Disney, Pixar, Marvel, Star Wars, National Geographic and Disney+ originals.

Apple TV+ is part of Apple’s Services business that has emerged as a major revenue contributor in the past couple of years.

Apple TV+ originals are getting recognized globally as critically acclaimed releases. Recently Apple TV+ original Ted Lasso became the most awarded series at the 2022 Critics Choice Awards for best comedy series.

However, in comparison, Netflix’s content is still more popular. Six of the 10 most searched shows in 2021 were on Netflix, and it had the year’s biggest hit in Squid Game.

Zacks Rank & a Stock to Consider

Stiff competition and muted subscription growth have impacted Netflix, as evident from its Zacks Rank of #4 (Sell).

Gray Television GTN from the broader Consumer Discretionary sector is a stock to consider. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Gray Television currently carries a Zacks Rank #2 (Buy).

In the year-to-date period, Gray’s shares have appreciated 17.2% against the Zacks Broadcast Radio and Television industry’s and the Zacks Consumer Discretionary sector’s decline of 26.4% and 17.8%, respectively.


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Apple Inc. (AAPL) : Free Stock Analysis Report

Netflix, Inc. (NFLX) : Free Stock Analysis Report

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