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Drexel Hamilton's Tony Wible maintained a Buy rating on
Netflix, Inc.NFLX, with a price target of $150.
Wible expects to see two new virtual MVPDs during 2016, given that
Amazon.com, Inc. intends to launch a live TV platform, while
AT&T Inc.T intends to have three digital plans.
The analyst believes that these VMVPDs would be advantageous for Netflix and other premium TV networks, since their lower costs makes premium video products more affordable for the consumer.
Wible also mentioned that "the VMVPDs would be wise to more seamlessly integrate the low cost OTT content (boosting NFLX utility)," while adding that "they may shift AMZNs focus towards being a NFLX partner rather than a competitor."
Given that most Netflix customers already have an MVPD package, moving to VMVPD would help them save money. "VMVPD consumers would have more discretionary spend that they can allocate to premium services like NFLX and HBO," Wible explained.
According to the Drexel Hamilton report, "Even though OTT networks compete for viewers, there is little evidence that they are mutually exclusive as AMZN, NFLX, and HBO are all near record sub levels."
Wible believes that it would be in Amazon's best interest to shift its video focus to VMVPD, since it would make it cheaper to get video content.
"Repositioning AMZN as a VMVPD would solidify NFLX's leadership position and may align AMZN as a partner rather than a competitor," the report added.
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Posted In: Analyst ColorLong IdeasNewsReiterationAnalyst RatingsTechTrading IdeasDrexel HamiltonTony Wible
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