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Netflix New Feature Lets Users Be More Selective

Zacks Equity Research

Netflix Inc. (NFLX) will allow its subscribers to be selective about their movie and show recommendations that they will like to share with friends on Facebook (FB).

Earlier, Netflix subscribers whose accounts were linked to their respective Facebook accounts automatically ended up sharing everything they were watching with the entire friend list.

Netflix believes that the open-ended system of sharing had made many people reluctant to use the sharing feature. People were not comfortable sharing their preferences with acquaintances.

Per the new system, lists displaying the names of Facebook friends will appear on screen once Netflix subscribers finish watching a video, provided the sharing feature is enabled.

The company believes that by giving more control to users for sharing their preferences, will enable it to gain user loyalty. This, in turn, will enhance its user base and drive growth going forward.

Netflix’s association with Facebook dates back to 2011 when the two had linked their services for overseas business. Later in 2013, again they collaborated for U.S.-based business.

During the recently concluded second quarter of fiscal 2014, Netflix had surpassed 50 million subscribers, with the majority of them being from the U.S.. In the near future, the company intends to extend its foothold in the international arena by launching its services in Germany, France, Austria, Luxembourg, Switzerland and Belgium.

Although we believe that a fast growing subscriber base will drive the top line this year, rising content costs and expenditure related to international expansion are major headwinds. Moreover, intensifying competition from the likes of Amazon.com (AMZN), Google’s (GOOGL) Youtube, HBO and Hulu remains a major concern.

Currently, Netflix has a Zacks Rank #3 (Hold).

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