How the new Apple TV could be a big win for Netflix, and help it make more money

Business Insider | Sep 13, 2017, 07.03PM IST

Unbreakable Kimmy Schmitt

Photo by Eric Liebowitz courtesy of Netflix

Tituss Burgess and Ellie Kemper in Netflix's "Unbreakable Kimmy Schmidt."

On Tuesday at Apple's iPhone launch extravaganza, the company also announced a new Apple TV that supports 4K and HDR (High Dynamic Resolution), both of which are upgrades of picture quality.

And the biggest winner from the new Apple TV will likely be Netflix, analysts from Bank of America Merrill Lynch wrote in a note Wednesday. Netflix has a pretty robust selection of TV shows and movies that take advantage of those features, but the real boon for Netflix is that getting access to titles in 4K requires its expensive plan.

"Overall, we see Netflix as the biggest beneficiary in our coverage from Apple TV as it could help increase 4K TV demand and potentially move subscribers to higher priced ($11.99) 4K subscription plans," the analysts wrote. The most common Netflix plan - which includes HD (but not 4K) - costs $9.99 a month, while the lowest priced plan costs $7.99 a month.

Getting subscribers to voluntarily switch to a more premium plan because they are excited to watch 4K movies and TV shows would be great for Netflix. That's especially true because Netflix subscribers have a tendency to freak out when the company tries to raise prices.

In 2016, Netflix tried to spin a price hike with the term "un-grandfathering," but people still canceled their accounts to a degree that led the company to blame its earnings miss on media coverage of the price increases. No doubt Netflix would like to avoid having to do that again.

But Netflix has said it will spend $7 billion on programming next year, so any bump in those monthly fees would help take some pressure off the bottom line.

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