Benchmark 'skeptical' of Netflix plan to crack down on password sharing
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Netflix (NASDAQ:NFLX) is reportedly trialing that would cause primary account holders to pay more an added fee for non-household users to use the service, but investment firm Benchmark is "skeptical" of its success.
Analyst Matthew Harrigan, who rates Netflix (NFLX) hold with a fair value of $443, said the plan, being trialed on a limited basis in Chile, Costa Rica and Peru, is a "new approach" to generate more revenue, but is not certain it will be a "growth game changer," as it likely "cannibalizes full ride member growth."
"Reasonably, the high margin revenue benefit might be current members sharing passwords (~30%) x incremental revenue contribution (~25%) x percentage of households taking the new plan (50%?)," Harrigan wrote in a note to clients.
The analysts added that it would equate to a benefit of less than 4% revenue before Netflix cannibalized itself by not converting an additional one or two outside members to standalone subscribers, a bonus that he called "moderate."
Netflix shares were down fractionally in premarket trading to $356.60.
Recent studies cited by Harrigan suggest that roughly 30% of Netflix (NFLX) members share passwords outside their households. 
Harrigan noted that he is bullish on the direct-to-consumer streaming market, but Netflix (NFLX) is viewed as a "first among equals rather than a dominant player commanding overwhelming network effects in a winner takes all outcome." 
On Tuesday, Netflix (NFLX) announced it was developing five new titles based on the works of Dr. Seuss.