Netflix 'Pulling New Levers' With Content Strategy to Reduce Churn: Wedbush
The Netflix “first-mover advantage” and its large subscriber base gives it a “nearly insurmountable competitive advantage” over streaming peers, Wedbush analyst Michael Pachter wrote investors Wednesday, upgrading shares to “neutral” from “underperform.” Netflix “appears to have hit a ceiling" on…
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subscribers in the U.S. and Canada “and is pulling new levers to lower churn,” he said, citing a new season of the Russian Doll series in Q2 and the final season of Stranger Things scheduled to straddle Q2 and Q3. Subscription price increases will likely fuel added content production and growth in other regions, Pachter said. Future subscriber growth will occur mostly in less developed regions at much lower subscription prices, while subscribers in saturated markets pay higher rates to fund new content. Wedbush expects Netflix to deliver profit growth as long as it can continue raising subscription prices, “but competition may create a price ceiling.”