Recently, Netflix Inc (NFLX) and the Scholastic Media announced that they will soon launch a new original TV series based on the iconic TV show The Magic School Bus. The new show would be titled The Magic School Bus 360 degrees.
Telecast for 18 consecutive years and watched in almost 39 nations, The Magic School Bus is the longest running animated science series for kids in history. The new series will use computer generated animation. Netflix has acquired the rights to stream 26 episodes of the show starting from 2016.
Netflix recognizes the fact that kids make up a significant chunk of TV show and film viewers. To capitalize on this, the company had launched its exclusive Internet video streaming service for kids, Just For Kids way back in 2011.
Per Netflix, the new series will feature some of the latest tech innovations such as robotics and wearables to captivate children’s imaginations, which in turn would motivate them to take interest in science. We believe that this move will help Netflix to strengthen its footprint in kids programming amid growing competition from the likes of Amazon.com (AMZN) and Hulu.
Over the last one year, Netflix has entered into partnerships with major film studios and production houses like The Wachowskis (creators of The Matrix trilogy), J. Michael Straczynski (Babylon 5), Gaumont International, Sony Pictures and The Weinstein Company (TWC), apart from Walt Disney (DIS) and Dreamworks.
These deals have helped Netflix to not only grow its content portfolio but also to move into new segments such as comedy, political thrillers, autobiographies and horror.
This has been the primary reason behind its success in the recent times. Netflix added 11.89 million paid streaming subscribers over the last 12 months. Its total streaming subscriber base increased 12.04 million year over year to 48.36 million, primarily driven by its expanding content portfolio that includes original and popular productions such as Arrested Development and House of Cards.
International expansion is another key growth driver for Netflix. The company recently announced its plans to enter Germany, Austria, Switzerland, France, Belgium and Luxembourg by the end of 2014.
However, starting operations in a new country demands huge investments and increases marketing and general and administrative expenses considerably. Netflix, therefore, expects the international segment to continue to report a loss for the rest of 2014.
Nevertheless, Netflix’s recent price increases (for both domestic and international new users) will help the company to offset these higher expenses. Moreover, the company’s ever-expanding content portfolio and focus on improving customer engagement will continue to boost subscriber base.
Currently, Netflix has a Zacks Rank # 3 (Hold).
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