The average monthly subscription fee that
charges its customers has declined from around $17 in 2005 to $13 in 2009.
Netflix has been working towards improving its online movie portfolio lately, which could dissuade subscribers from moving into a higher priced package. We expect the downtrend in subscription fee to continue, but at a slower rate in the coming years.
Netflix competes with video on demand service provided by cable and satellite operators like
Time Warner Cable
We currently have a Trefis price estimate of $85 for Netflix's stock, about 47% below the current market price of $162.
Netflix offers a number of subscription packages that differ in the number of DVDs a customer can rent out at any given time. Unlimited online movie streaming is included free with almost all packages. As Netflix makes more and more titles available online, the fraction of customers upgrading to premium packages (allowing customers to rent up to eight DVDs at a time depending on the package) may fall.
Netflix is also eying for international expansion by starting a streaming-only program in Canada in 2010. Since costs of online delivery are cheaper than DVD shipments, Neflix is passing on some of the cost advantage to customers in the form of a lower subscription fee.
The average of Trefis member forecasts for monthly Netflix subscription fee indicate a decrease from $12 per month in 2010 to $11.40 per month by 2016, compared to the baseline Trefis estimate of a decrease from $11.80 per month in 2010 to $10.50 per month by the end of the Trefis forecast period. The member estimates imply an upside of 12% to the Trefis price estimate for Netflix's stock.
Our complete analysis for Netflix's stock is
Trefis members constitute more than tens of thousands of users of the Trefis platform, inclusive of investors, financial analysts, and business professionals who use the Trefis platform to create their own models and price estimates.
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