Netflix Doesn't Need a Price Cut to Compete
Netflix (NASDAQ: NFLX) lost U.S. subscribers for the first time in about eight years during the second quarter, and one analyst thinks it could get much worse. With the impending launches of new streaming services from Apple (NASDAQ: AAPL), Disney (NYSE: DIS), AT&T's (NYSE: T) WarnerMedia, and Comcast's (NASDAQ: CMCSA) NBCUniversal, Needham analyst Laura Martin believes Netflix's domestic subscriber count could fall by 5 million to 10 million users in 2020.
That is, unless the streaming leader offers a cheaper service. Apple TV+ will cost just $4.99 a month at launch and Disney+ will cost just $6.99. Netflix's service starts at $8.99 per month, and its most popular plan costs $12.99. Martin suggests it could compete with a $6 per month ad-supported service -- the same pricing as Disney's Hulu.
Lower pricing from new competitors shouldn't have nearly as big an impact on Netflix as Martin suggests. Here's why.
Source Fool.com
