Netflix is already the top streaming service and gained a huge amount of new subscribers during the early months of the coronavirus pandemic. But does Netflix still have room to grow?
According to one analyst, it does.
RBC analyst Mark Mahaney, as reported by The Street, published a note recently which predicted that Netflix could reach as many as 500 million subscribers by 2030, up from its current total of just under 200 million.
Where will those new subscriptions come from? Mahaney also predicted that Netflix will reach 57 percent market share of global broadband households (outside China), from its current total of 29 percent. He also raised his price target to $610 a share, a 15 percent increase. The company’s stock was trading at $506 a share as of Tuesday morning.
"We view the steady expansion in U.S. contribution margins as demonstrating the company's profitability, with its fixed-cost content nature and historically declining churn rates suggesting further margin expansions," the analyst wrote. “We also view Netflix as one of the best derivatives off the strong growth in online video viewing and in internet-connected devices.”
The RBC report comes on the heels of earlier fears that the pandemic, which caused a shutdown in production for much of the entertainment industry, could lead to a reduction of new programming, which could in turn cause Netflix to lose subscribers.
Another analyst, Michael Pachter, of Wedbush Securities, had made that case last month in a note.
“We suspect that this phenomenon has already begun and led to the company’s lackluster guidance for Q3 net sub additions,” Pachter wrote August 24. “Once the pace of its delivery of new content begins to wane, we expect Netflix to see higher churn and much slower subscriber growth.”
Netflix, however, has a huge amount of movies and TV shows banked, which they have the ability to spread out further over time, while Netflix also has the ability to acquire movies from Hollywood studios, which it has already begun to do.
Meanwhile, Nielsen recently put out its first weekly ratings for streaming services. And while the ratings only cover shows on Netflix and Amazon Prime Video, Netflix dominated, taking up the entire top ten in the ratings, which covered August 3-9. The original series “The Umbrella Academy” took the top spot, but the rest of the top ten was taken up by such legacy content as “Shameless,” “Grey’s Anatomy,” “Parks and Recreation,” “The Office” and “Criminal Minds.”
Nielsen’s ratings were measured by the metric of “minutes viewed,” which gave the advantage to those series, which have many seasons and many episodes, whereas most Netflix original shows have shorter seasons, and fewer of them.
Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.