Netflix password reset could be worth $3 billion

According to a new report from Wells Fargo, more Netflix password thieves will create their own accounts rather than pay to share.

With Netflix, password sharing is not cool. You know what’s cool? New members.

With the whole password-sharing act, the streaming king may have stumbled into a bigger financial windfall than expected. A March 29 research report from Wells Fargo stock analysts, obtained by IndieWire, suggests that more of the people currently renting Netflix logins will become new stand-alone subscribers rather than becoming lower-cost add-ons.

About 30 million paid sharers in the US and Canada are likely to pay more than $7.99 per month to add an additional member to their existing account. According to Wells Fargo, 15 percent (4.5 million paid-up shareholders) exercise this option, with worst estimates at 10 percent (3 million) and best-case estimates at 20 percent (6 million).

However, analysts believe that 25 percent of those currently borrowing or sharing the service (7.5 million paid sharers) will give in and create their own Netflix account. (In the worst case: 20 percent/6 million, in the best case 30 percent/9 million.) Bottom line: According to analysts, 40 percent (or 12 million) of the 30 million password borrowers will turn from free subscribers to recognized subscribers, one-way or another.

Netflix’s entry-level subscription, Basic with Ads, is $6.99 per month; ad-free $9.99. The standard plan, which will likely allow you to download and use it on two devices at the same time, is $15.49 per month. Premium, which offers the best audio/visual experience and can be downloaded and used simultaneously on six or four devices, costs $19.99.

We calculate that $15.49 is greater than $7.99. (I have an MBA.) For Netflix, it is much bigger.

Adding 7.5 million new domestic members through paid sharing alone compared to Wall Street’s estimate of 2 million by 2023 is a damn good start. In addition, it can bring in additional revenue of 1-2 billion dollars. The international opportunity is potentially greater.

Camille Razat as Camille in episode 304 of the Netflix series "Emily in Paris"

Camille Razat as Camille in episode 304 of the Netflix series Emily in Paris


There are an estimated 70 million paid shareholders outside the U.S. and Canada, which could add another 14 million net in a new revenue range of $900 billion to $2.5 billion.

Wall Street currently sees Netflix adding 15 million paying subscribers worldwide by 2023. Wells Fargo says it could be more than 20 million, and it believes Netflix ( NFLX ) stock has recently taken off — shares have risen from about $294 a week ago to roughly $340 today. “reflects early bullishness around the paid sharing option.”

It makes sense when you consider that we are talking about potentially $3 billion in found revenue. Here’s what also makes sense: Wells Fargo’s $400 price target on NFLX — along with the belief that the stock could go as high as $560. It’s starting to feel like the old days.

All this optimism may be tempered by a report Forbes Home It came out earlier this month in which 35 percent of 1,000 respondents said they would ditch Netflix if prices went up and password sharing was introduced. Just think about that for a moment: 35 percent of Netflix’s 230 million global subscribers are a whopping 80 million subscribers. If the threats of the vote come true, Netflix would return to the numbers of early 2019.

See results from Netflix and other streamers below. The same survey found that Netflix was the most popular and preferred streaming service.

Forbes Home Survey: Which streaming service would you ditch if prices—and regulations—raised?

Forbes Home Survey: Which streaming service would you ditch if prices—and regulations—raised?

Courtesy of Forbes

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