BMO analysts predict Netflix, YouTube to raise prices in 2H24

Investing.com - In an analyst note on Wednesday, BMO Capital Markets suggested that the recent price increases announced by Spotify Technology SA (NYSE:SPOT) and Max of 9.1% and 6.3% respectively indicate that users continue to value content despite increasing costs.

This trend positions Netflix Inc (NASDAQ:NFLX) and YouTube well for potential price hikes in the second half of 2024, especially for their non-ad plans.

BMO Capital Markets notes that Netflix has the potential to raise prices for its non-ad plans across various regions in 2H24. The firm cites the appealing content lineup set for 2H24, including sports, Squid Game, and Outer Banks, as providing an opportunity for Netflix to implement these price increases.

Furthermore, Netflix's burgeoning ambitions in the gaming sector may provide an alternative monetization opportunity, which could further boost engagement with its 270 million members.

The company said in a recent press release, “Netflix is all about choice, and just like our members might watch an award-winning film one day and a whole season of a reality show the next, we’re building a games portfolio meant to offer something to every one of our members, no matter your taste or mood."

BMO also anticipates that Netflix's shift towards AVOD (Advertising Video on Demand) will be positive, predicting user growth will precede monetization.

On the YouTube front, analysts see potential for price increases for YouTube Premium/YouTube TV, citing the platform's value proposition with live sports and various engagement/product initiatives.

The firm also mentions YouTube's recent product enhancements, like the Views filter for real-time sports content and the testing of improved quality parameters, as factors that could boost user engagement and justify potential price hikes.

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