Netflix, Inc. (NASDAQ:NFLX) continues to dominate the market share in the movie rental segment among teens, according to Michael Olson, senior analyst at PiperJaffray based on the result of the research firm’s semi-annual survey of 5,200 students.
According to Olson, the respondents in the study were asked regarding their current practices in renting movies and how they expect to rent movies in the future. The results of the study showed that 6 percent of the respondents rent movies using the DVD by mail service. In Spring last year, 9 percent of the respondents used DVD by mail.
The survey also revealed that 46 percent of the respondents download or stream movies. Netflix, Inc. (NASDAQ:NFLX) emerged as the primary choice of service among teenagers as 59 percent of the teens said they expect to use the company to rent movies over the next five years.
Its market share among teens increased from 48 percent during the previous survey in spring, last 2012. Eighteen percent (18 percent) of the respondents said they will use Redbox while 3 percent said they will continue to use rental stores.
Olson is confident that Netflix, Inc. (NASDAQ:NFLX)’s domestic streaming service will continue to grow over the long-term due to the increasing popularity among younger subscribers. For this reason, the research firm increased its price target for Netflix stock from $143 per share to $170 per share.
In his note to investors Olson wrote, “We believe Netflix, Inc. (NASDAQ:NFLX) continue to have strong mind-share and remains well positioned for growth in the movie rental category. The company participates directly in DVD-by-mail and movie streaming categories, but does not participate in the segment that will likely decline the most over the next two years (retail stores). In these two segments combined (DVD-by-mail & movie streaming), Netflix has services addressing 52 percent of teen rental habit (up from 46 percent one year ago).”
Olson also believes that Netflix, Inc. (NASDAQ:NFLX) will outperform other digital competitors in the movie rentals category and it will become the biggest brand within the next five years.
Meanwhile, PiperJaffray’s Gene Munster found that Apple Inc. (NASDAQ:AAPL) is still “cool” among teenagers based on the results of his semi-annual teen survey this year.
The results of the survey indicated that Apple remain the most popular technology brand among teens. Based on the survey, 48 percent of teenagers who participated in the survey owned an iPhone, up from 40 percent in the previous year, and 63 percent owned an iPad.