Netflix (NASDAQ: NFLX) is set to introduce a charge for sharing passwords between households, and research by Jefferies suggests the change could have negative implications for the streaming giant.
Interviewing 380 “password borrowers”, 62% of respondents investment firm survey said they will stop using Netflix (NFLX) for a number of reasons, including 25% of that group saying they couldn’t afford the service. Thirty-one percent said they didn’t like the content enough to pay for it, while 35% said they might switch to Netflix (NFLX) with another service.
Analyst Andrew Uerkwitz, who has a buy rating and a $425 price target per share on Netflix ( NFLX ), also highlighted some other interesting results from the survey, including 69% of those who said they might trade Netflix ( NFLX ) cited him among their top three favorite services.
Additionally, 32% said Netflix ( NFLX ) is where they go when they don’t know what to watch, and 24% said it would be the service they were least likely to give up.
“Our estimates point to 21% borrower retention in 2023, rising to [approximately] 45% by the end of 2024 – we feel good about that in light of a survey where 38% indicated current retention after cracking password sharing,” Uerkwitz wrote in a note to clients.
Other findings in the survey include that there were more than 700 people who didn’t have access to Netflix ( NFLX ), but roughly 40% were at least “somewhat interested” in the company’s level of advertising support.
Nearly half of Password users, or 48%, said they leave and return to the streaming service at least once a year, up from about 46% in the previous survey.
The survey also found that Hulu, owned by Walt Disney ( DIS ) and Comcast ( CMCSA ), is a more relevant competitor to Netflix ( NFLX ), while Google’s ( GOOG ) ( GOOGL ) YouTube is seen as “well-positioned” to benefit from the price war.
Shares of Netflix ( NFLX ) fell slightly in premarket trading on Monday.
Last week, GM ( GM ) announced it was joining forces with Netflix ( NFLX ) to pitch its electric vehicles to relevant series and movies.