Trefis has just launched coverage of Netflix which makes money through subscriptions to its US DVD rental service. Netflix differs from traditional film rental companies like Blockbuster by operating exclusively through postal mail and online delivery of films.
Netflix’s success depends on the number of subscribers that are signed up for one of company’s monthly plans. Although the subscriptions plan mix has trended down in recent years due to greater adoption of lower priced plans, the number of Netflix subscribers has increased from 4.2 million in 2005 to 11 million today. In comparison, Netflix’s brick and mortar competitor Blockbuster has been closing stores and losing subscribers to its subscription service. Blockbuster had 4,585 US stores in early 2009 compared to 5,194 in 2006. Blockbuster subscribers have decreased from 2.2 million in 2006 to less than 1.5 million today.
We expect Netflix subscribers to reach 21 million by the end of the Trefis forecast period. Currently, Netflix subscribers represent 11% of the 101 million DVD households in the US. Our subscriber forecast implies that this figure will rise to 17% of 115 million DVD households by the end of the forecast period.
Within Netflix’s content on our platform, you can see how the company’s stock price is impacted by the number of Netflix Subscribers.
