Netflix Offers Streaming-Only Subscription

Piper Jaffray has published a research report on Netflix NFLX after the company announced pricing and offering changes on 11/22. In the report, Piper Jaffray writes "While we continue to believe ARPU will fall each year as new & existing Netflix subs shift to streaming-only ($7.99/mo), we expect the price increase on DVD-by-mail plans will cause ARPU to be higher than expected in CY11. We are raising our CY11 quarterly ARPU from $33.71 to $35.97 based on our estimated changes in subscriber/plan mix. Net-net, we believe the relative impact of subs shifting to streaming-only will not outweigh the increasing ARPU for subs continuing to use DVD-by-mail in CY11. Long term, we expect more attractive streaming-only pricing ($7.99/mo vs. $9.99/mo with one DVD) will cause a continued migration to streaming-only, which will lead to continued decline in ARPU, but increasing profitability per sub." Piper Jaffray maintains its Overweight rating and has raised the price target from $180 to $202. Netflix closed yesterday at $188.23.