All posts from Zacks
Zacks in Our Research. Your Success.,

Netflix Tops HBO in Terms of Original Content, Shares Up 4%

Netflix, Inc. NFLX has apparently topped Time Warner’s TWX HBO in terms of demand for original content.

A recent survey report from Morgan Stanley MS states that Netflix has taken the no. 1 spot for its original content offerings, surpassing HBO that led the original content space for the past six years. Out of the 2,501 U.S. adults surveyed, nearly 29% people had disclosed that they preferred Netflix while only 18% swore by the HBO offerings. In last year’s study, Netflix had received only 23% votes in contrast to 31% people opting for HBO.

In addition, the report also stated that approximately 45% of Netflix subscribers considered original programming as one of the most important reasons for taking the subscription (last year only 34% respondents cited this reason).

Perhaps, Netflix had been banking on this trend when it decided to go ahead with its impending price hike plan. In the coming month, Netflix will be raising subscription charges for its older customers to $9.99 (from the existing $7.99), bringing it at par with the newer subscribers.

In such a scenario, the aforementioned news came like a breath of fresh air for Netflix investors as there were significant concerns regarding the erosion of consumer base once the increased prices were in effect. Buoyed by the positive sentiments, Netflix shares gained 4.2% in yesterday’s trading session.

Since the past year, the company has been putting in a lot of efforts to develop its original content portfolio. This year, the company plans to bring out as many as 31 original series (including both new and sequels), about 8 original feature films and 12 documentaries, 35 original kids’ series and 9 stand-up comedy shows. Analysts forecast that in 2016, Netflix will air about 600 hours of original content. To get a better perspective, in 2015, the company aired about 320 hours of original content and that was almost thrice of what was aired in 2014, as per a Forbes report.

Apart from increasing investments in original programming and content acquisition, Netflix is also being smart to improve its user experience.

Lately, there have been talks that the company is set to support high-dynamic range (HDR) video formats. Such videos are a step ahead of the conventional HD formats and are much more appealing to viewers. Media reports state that the company is already airing Marco Polo season 1 in HDR and Marvel's Daredevil is expected to be the next in line.However, a user will require a TV that supports HDR format to view these.

At present, Netflix carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is AMC Networks Inc. AMCX, sporting a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 DaysClick to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
TIME WARNER INC (TWX): Free Stock Analysis Report
NETFLIX INC (NFLX): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
AMC NETWORKS- A (AMCX): Free Stock Analysis Report
To read this article on click here.
Zacks Investment Research