Riding high on the success of Marco Polo, video-streaming service provider Netflix Inc. (NFLX) recently topped its rival, Time Warner’s (TWX) HBO in the U.S.
Marco Polo represents a powerful epic of a medieval dynasty that’s wrapped with political intrigue. It is pitted against the likes of HBO’s Game of Thrones.
Meanwhile, Netflix announced the date for the release of its fourth-quarter earnings to be Jan 20, 2015. Moreover, the company also recently launched a New Year’s Eve video for kids on Dec 31, 2014 in order to trick them to believe that it was midnight, well ahead of the actual time. This was done with a view to make the kids go to bed in time.
We believe that services like this will help the company in winning the confidence of its users and attract new users, going forward. This will drive profitability of the company in the near future.
We believe that shows like Marco Polo will help Netflix in extending its footprint in the international arena, which again will be a major positive catalyst for the company, going forward.
Of late, Netflix has been endeavoring to rope in celebrities in an attempt to enhance its reach. Netflix recently signed a deal with Chelsea Handler to create a new talk-show slated for a 2016 release. The deal also includes a stand-up special coupled with four docu-comedy specials, all featuring Chelsea.
Netflix’s partnerships with major film studios and production houses like CBS Corp (CBS), Sony Pictures, The Weinstein Company and Walt Disney (DIS) are also expected to further expand its content library in the long haul.
Nevertheless, we believe that Netflix is blessed with a robust product pipeline that would lead to subscriber growth in the near future. Upcoming Netflix shows include five original series based on Marvel superhero characters starting with "Daredevil" next May. Other original Netflix shows in the works are science-fiction tale "Sense 8" from the makers of "The Matrix," and a comedy "Grace and Frankie" starring Jane Fonda and Lily Tomlin.
Although we believe that a fast growing subscriber base will drive Netflix’s top line this year, rising content costs and expenditure related to international expansion are major headwinds.
Currently, Netflix has a Zacks Rank #4 (Sell).
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