Netflix, Inc. (NASDAQ:NFLX) Mobile-Only Plan Is a Hit

Netflix, Inc. (NASDAQ:NFLX) Mobile-Only Plan Is a Hit

Netflix, Inc. (NASDAQ:NFLX) Mobile-Only Plan Is a Hit

Netflix (NASDAQ: NFLX) unveiled a mobile-only streaming plan in India last summer in an effort to win over consumers that were interested in Netflix’s content, but bulked at its relatively high price. The plan debuted at just 199 Rupees per month in July. That’s less than its biggest rival, Disney‘s (NYSE: DIS) Hotstar, which increased its monthly price to 299 Rupees last April.

The low-priced plan has been a considerable growth driver for the streaming media company in the country. Management said it’s performed better than expected during the company’s third quarter earnings call in October. That month it expanded its mobile-only offering to Malaysia, at a slightly higher price point. After seeing success in 2019, the company is expected to expand the offer to even more markets, most likely in the Asia-Pacific region, according to The Hollywood Reporter.

Netflix’s success so far

Netflix has made a big commitment to the Indian market, but up until 2019, it didn’t have much to show for it. About three years after launching in the market in early 2016, it had just around 1 million or 1.5 million subscribers.

But it’s estimated to have added over 1 million net new subscribers in the country last year alone. More than half of that number is attributed to the new mobile-only plan, according to Mihir Shah, Media Partners Asia vice president for India.

Granted, Netflix has also stepped up its local content investments in India. An increase in content that resonates with the Indian audience likely helped boost interest in the streaming platform, but the lower-priced plan has enabled Netflix to convert more interested consumers into paid subscribers.

A big opportunity for subscriber growth

Netflix released region-based financials last month in preparation to start reporting based on geographic segments starting with its fourth quarter 2019 report this month. One of the key details of the report was the disclosure of 6.5 million paid subscribers in the Asia-Pacific region, a number some analysts found disappointing considering the substantial population in the region (even when excluding China).

But the other way of looking at the figure is that Netflix has a massive opportunity to win new subscribers. Netflix’s 2 million or so Indian subscribers at the end of 2019 may seem small, but consider Hotstar only had 3 million premium subscribers last summer. The field is still wide open for the competition.

After the success in India, rolling out the new plan to more countries that exhibit similar characteristics — lower average GDP, higher percentage of streaming on mobile — should fuel subscriber growth for Netflix.

Watch average revenue per subscriber

One of the nice presents Netflix provides investors in its new regional reporting is a breakdown of average revenue per subscriber. That’s especially important in light of the new mobile-only plans in India and Malaysia and their potential expansion to new markets this year. Over time, investors should see average revenue per subscriber decline.

But it’s possible, even likely, that mobile-only subscribers will convert to full-feature subscribers over time. Ans as consumers spend more and more time with Netflix, the company may be compelled to open up more streaming options.

Netflix has even experimented with pricing for new subscribers, offering a discount of up to 50% for long-term commitments. That may be another way for the company to convert customers from its low-priced plan to higher-priced plans over time.

Netflix has a lot of ways to play with pricing in order to maximize subscriber growth in markets where it’s underpenetrated. While most of that subscriber growth will come with lower average revenue, over time Netflix should be able to increase how much customers are paying. Investors have already seen it do just that in the U.S., Canada, Europe, and Latin America. The starting price in Asia-Pacific might just have to be a bit lower.

Technical Indicators

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 312.14.

The projected upper bound is: 345.74.

The projected lower bound is: 314.27.

The projected closing price is: 330.01.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 26 white candles and 23 black candles for a net of 3 white candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 61.2231. This is not an overbought or oversold reading. The last signal was a sell 1 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 55.53. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 12 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 3. This is not a topping or bottoming area. The last signal was a sell 0 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 6 period(s) ago.

Rex Takasugi – TD Profile

NETFLIX INC closed down -6.610 at 329.050. Volume was 38% below average (neutral) and Bollinger Bands were 26% wider than normal.

Open     High      Low     Close     Volume___
337.130 338.500 327.270 329.050 4,720,540
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 330.22 309.89 323.83
Volatility: 34 32 39
Volume: 4,816,934 5,768,301 7,150,525

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

NETFLIX INC is currently 1.6% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into NFLX.O (mildly bullish). Our trend forecasting oscillators are currently bullish on NFLX.O and have had this outlook for the last 61 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.

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