By Emily Dattilo
Netflix is faring well in the live-sports streaming battle, so it may be able to raise subscription prices, UBS argued on Monday.
Analysts led by John Hodulik rate the streaming company at Buy with a target of $1,040 for the stock price. Shares were down 1.8% to $891.65 in late morning trading.
For the two NFL games Netflix streamed on Christmas Day, it generated about 24 million average viewers in the U.S., a figure that trails behind the 28 million average viewers for ABC, CBS, and Fox's Christmas telecasts last year, the analysts wrote. That being said, Netflix flew past viewership for Amazon.com's Prime Video's Thursday Night Football this season. Its performance was similar to what Peacock achieved with its wild-card playoff game last year.
"While viewership fell short of broadcast, we believe Netflix is positioned to take on additional sports rights over time," the analysts wrote. "This should pave the way for additional price increases over time while enhancing the advertising offering."
UBS believes that NFL games will offer a roughly 3% lift to Netflix's U.S. viewership in December and increase its share of overall TV viewing by about 0.30 percentage point, building upon strides it made with the Tyson-Paul fight in November. The streaming-data research company Antenna estimates that the fight brought in 1.43 million sign-ups within three days of the event, wrote Seaport Research analyst David Joyce, who rates Netflix at Neutral.
If there were a million sign-ups around the two Christmas Day games, the lifetime value of new subscribers won via having the NFL rights could be $57 million, assuming 20% monthly churn and estimated average revenue of $11.49 per member, Joyce believes.
That points to an opportunity management highlighted recently. "At the recent UBS Media and Communications conference, Co-CEO Ted Sarandos tied future price increases to increased engagement and improved overall value to members, including through marquee live events," the UBS analysts said.
The company hasn't lifted the price of the standard U.S. plan since early 2022, the analysts wrote, saying "a price increase in line with historical changes across the ad-free plans would drive an estimated $1B in incremental annual revenue and EBIT," or earnings before interest and taxes.
Write to Emily Dattilo at emily.dattilo@dowjones.com
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(END) Dow Jones Newswires
December 30, 2024 12:19 ET (17:19 GMT)
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