Netflix Bolsters Content as Competition Heats Up

by Trefis Team
-12.09%
Downside
340
Market
299
Trefis
NFLX
Netflix
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Netflix’s (NASDAQ:NFLX) stock suffered a notable decline during the past week after Comcast (NASDAQ:CMCSA) introduced its lower priced streaming service for its own subscribers (see article Xfinity Streampix Arrives: What’s the Value for Comcast?). Overall the rising competition against Netflix in the U.S. has started to accelerate and the company will need to step on the gas pedal of innovation and content acquisition in order to stay ahead. Comcast is just one example but there are others such as Blockbuster, Hulu, Amazon (NASDAQ:AMZN) and Verizon (NYSE:VZ) who are getting more serious towards pursuing the online streaming market. We examine this developing competition in our article - Netflix’s Competition Abounds, Innovation is the Key for Subscriber Growth.

See our complete analysis for Netflix

To counter the competition and compensate for loss of Starz content upon deal expiration, Netflix has been continuously enhancing its streaming library with both older and new exclusive titles. Some of the examples include House of Cards, Lillyhammer, Hemlock Grove and The Arrested Development.

Recently, Netflix acquired exclusive rights for some of the movies and documentaries from The Weinstein Company. [1] This is a multi-year deal and includes some high profile titles that have been nominated for Academy Awards.

Furthermore, Netflix is nearing a deal with Univision Communications to stream the Spanish language tittles to its U.S. subscribers. [2] This move will address a key demographic that encompasses about 16% of the U.S. population. Netflix’s competitor Hulu has already started offering Spanish language programming.

On the technology front, Netflix made it clear that it has no current plans of bringing its streaming to Blackberry devices, making a dent into reputation of already troubled RIM (NASDAQ:RIMM). [3]

Our price estimate for Netflix stands at $133, implying close to 20% premium to the market price.

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Notes:
  1. Netflix locks up Academy Award nominated exclusives from The Weinstein Company, engadget.com, Feb 22 2012 []
  2. Netflix Said Near Accord With Univision for U.S. Rights, Bloomberg, Feb 25 2012 []
  3. (Reuters) – Online and mail-order video company Netflix has no plans to bring its streaming service to Research In Motion’s PlayBook tablet., Reuters, Feb 24 2012 []
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