Netflix Brings Bluth Family Back - Analyst Blog
December 13 2012 - 4:30AM
Zacks
Netflix Inc.’s (NFLX) Canadian subscribers can
watch the histrionics of the Bluth family as the critically
acclaimed show ‘Arrested Development’ is now exclusively available
on Netflix. The first three seasons are available for subscribers
and the fourth season will go on air in 2013.
So far, Canada is the strongest market among all of its
international ventures. Netflix’s Canadian streaming service was
launched in late 2010 and has seen a growing subscriber base.
Moreover, Netflix reported that revenue from Canada exceeded its
content expenses in the last concluded quarter (third quarter).
To build on the success that Netflix has achieved in the
country, the company has added a number of TV shows and films to
its streaming portfolio. The shows and films added in the recent
months include ‘The Vampire Diaries’, ‘Pretty Little Liars’ and
‘Community’. Apart from these, the company had also roped in local
Canadian shows such as ‘La Galere’ and ‘Trailer Park Boys’.
Going forward, we expect more content to be available for
streaming for Canadian subscribers to further expand its presence
in the country. However, competition from Comcast
Corporation (CMCSA), with its Streampix service, and
Shaw Communications (SJR) in the country remain
the headwinds for Netflix.
Netflix’s endeavor has been to provide diversified streaming
content. To accomplish that goal, the company has entered into a
number of licensing agreements with big Hollywood production
houses. However, the company continues to witness cost escalation
due to higher license and renewal fees. Netflix needs to pay $5.0
billion for streaming content obligations, out of which $2.1
billion is to be paid within the next 12 months.
Netflix’s new and exclusive content offerings to its subscribers
are the company’s biggest USP compared to some of its closest
peers. Apart from recent movies and documentaries, Netflix is also
boosting its original content portfolio to entice new subscribers
in the U.S. and International markets.
With its own content delivery network, Open Connect, Netflix’s
video library will be directly connected to Internet service
providers, ensuring fast data transfer that would eventually enrich
the customer experience.
We have a Neutral recommendation on Netflix over the long term.
Currently, Netflix has a Zacks #3 Rank (Hold).
COMCAST CORP A (CMCSA): Free Stock Analysis Report
NETFLIX INC (NFLX): Free Stock Analysis Report
SHAW COMMS-CL B (SJR): Free Stock Analysis Report
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