Home NewsStock Market News It is rumored that the pricing of Netflix’s advertising version is compared with that of its peers on Wall Street: high-level security charges are reasonable | Anue Juheng

It is rumored that the pricing of Netflix’s advertising version is compared with that of its peers on Wall Street: high-level security charges are reasonable | Anue Juheng

by WOOWinvest
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It is rumored that the pricing of Netflix’s advertising version is compared with that of its peers on Wall Street: high-level security charges are reasonable | Anue Juheng


Wall Street analysts believe that Netflix’s (NFLX-US) rumoured advertising subscription plan, which charges about half its peers, is playing the safety card and making sense.

Bloomberg recently reported that Netflix will launch an ad-supported subscription plan this year at $7 to $9 a month. The pricing is in line with peers such as $6.99 for Hulu’s ad version and $7.99 for Disney’s (DIS-US) Disney+ ad version.

Netflix, the former leader of the streaming industry, launched an ad version and compared its pricing to its peers, indicating that management is more cautious in dealing with the increasingly fierce market competition and the continued loss of users.

A Netflix spokeswoman said the company is still in the early stages of deciding how to roll out a low-cost ad-only subscription. “No decisions have been made yet, it’s all just speculation at this point.”

Netflix traded lower on the U.S. stock market on Monday after the news was reported last Friday, still closing up 0.58% at $224.57 per share.

In the past, Netflix has refused to launch a service with built-in advertisements in videos, but under the competition of the advertising version launched by the industry and the loss of subscribers, its CEO Reed Hastings also publicly stated in April this year that his position has changed, saying that management is considering advertising. Edition subscription plan, which may be implemented in stages over several years.

Morningstar stock market research analyst Neil Macker believes that launching an ad version service will not solve all of Netflix’s problems, “but it does help.” Because Netflix is ​​facing enemies from back and forth, on the one hand, media companies such as Warner Bros. and Disney have large content libraries for decades. On the flip side are giants with strong cash flow like Apple (AAPL-US) and Amazon (AMZN-US).

If Netflix does launch an ad version service, investors may be more concerned about its average revenue per user (ARPU). Craig Huber, an analyst at Huber Research Partners, said that Netflix’s ARPU in the first half of this year (to the end of June) was $15.43. If the ARPU drops significantly after the launch of the advertising version of the service, it means that members from the $19.99 plan will switch to the $7-9 model to watch. There are not enough programs, and there are not many advertisements, which is not enough to make up for the price difference.

However, Jefferies analyst Andrew Uerkwitz and CFRA analyst Kenneth Leon both said that investors can only hold on at this point, and the new subscription plan won’t affect Netflix’s performance until at least some point in 2023.

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