- Netflix could reach 90 million US subscribers within 10 years, Bernstein estimates.
- The streaming giant currently has 57 million domestic customers, and that growth has slowed in recent quarters.
- “90 million subscribers strikes many investors as very hard to believe,” the firm said. “Netflix is a superior product for entertainment programming, in almost every way, compared to conventional TV, so why not?”
- Follow Netflix’s stock price in real-time here.
It seems like everyone in the United States subscribes to Netflix.
That’s the conundrum that led Bernstein to ask: “Who in the US does NOT subscribe to Netflix?” And after surveying 1,000 US internet users, the firm concludes that Netflix could reach 90 million domestic subscribers in the next decade.
“90 million subscribers strikes many investors as very hard to believe,” Todd Juenger, the firms entertainment analyst, said in a note to clients Tuesday. “Although, it’s worth remembering that conventional U.S. pay-tv peaked at about 100 million subs (against a lower total household universe). We believe Netflix is a superior product for entertainment programming, in almost every way, compared to conventional TV, so why not?”
Ninety million isn’t too far removed from Netflix’s own guidance, but it is at the top end of the company’s forecasts of 60-90 million. Investors have begun to wonder how much penetration is left for Netflix in its home country, especially as subscriber growth has slowed in recent years.
Where it was previously adding subscribers at a quip of more than 20% year-over-year, that growth has slowed to around 10% in more recent periods:
Luckily, time is on Netflix’s side. While the company’s current customers skew much younger than traditional TV demographics – more than 80% of the people Bernstein surveyed who were under 49-years-old had access to Netflix in their household – the biggest chunk of internet users without Netflix is also young.
“There remain, today, an estimated 80 million U.S. adults who have Internet but do not have Netflix, and lots of them are young,” Bernstein says. “There is a virtuous reinforcing cycle that is in motion as well. As penetration rates increase among each current age cohort, the maths on the potential increase as they age becomes that much higher, because you are carrying a higher penetration rate forward as time progresses.”
Netflix is scheduled to report quarterly earnings on July 16, and as always, subscriber growth both in the US and internationally will be front of investors’ minds.
Shares of the company have risen 97% since the beginning of 2018 – easily outpacing the benchmark S&P 500 index’s growth of less than 1% in the same period. Bernstein has a $US372 price target for the stock.
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