Netflix (NFLX) recently upgraded its interface to make it more user-friendly. The new operating interface is expected to make it easy for users to browse content of their choice, as it displays more information about the recommended movies and television shows.
Netflix also updated the search function, which will now display results as a visual grid of tiles instead of text. The company also updated the kids section for a better search and viewing experience.
The speedy new interface is available on Microsoft (MSFT)’s Xbox 360 as well as on Sony’s (SNE) PlayStation 3 and 4 besides Smart TVs, Blu-Ray Players and the Roku 3 box. However, the new interface will not be available on Xbox One and Apple TV as well as on smartphones and tablets.
The new interface essentially focuses on television viewers who form a majority of Netflix’s more than 40 million subscribers. We also believe that Netflix will gradually extend the interface to other platforms such as tablets and smartphones. This will eventually help Netflix to attract more subscribers going forward.
Netflix’s focus on improving user engagement has been the primary reason behind its success in recent times. In the recently concluded third quarter of 2013, Netflix’s subscriber base increased 10.87 million year over year to 40.28 million. Sequentially, total subscriber growth was 2.72 million.
This strong subscriber addition was primarily driven by Netflix’s expanding content portfolio that includes original productions such as Orange is the New Black, as well as the complete seasons of popular shows from other production houses such as AMC.
Netflix continues to ink partnerships with major film studios and production houses. The recent partnership deal with Disney is expected to provide Netflix a competitive edge over peers that include HBO and Amazon (AMZN).
Although, Netflix’s continuous subscriber loss in its DVD business and higher spending on content acquisition are concerns, the company’s growing subscriber base will continue to be a major growth factor in the near term.
We believe that the expanding content portfolio, partnerships with overseas cable television providers and launch in new international markets will be the primary growth drivers going forward.
Currently, Netflix has a Zacks Rank #1 (Strong Buy).
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