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Netflix (NFLX) Ramps Up Effort to Diversify Content Library

Netflix NFLX is looking to diversify its content portfolio by including original programs from Africa. Reportedly, the company will order original shows from the continent in 2019.

In Africa, the streaming giant has already forayed into Nigeria, the world’s second-biggest movie industry by volume, after purchasing worldwide rights to Lionheart. We expect Netflix’s investments in the region to help it strengthen its position against Africa’s cable TV provider, Multichoice.

Focus on unique original series has been the main driver behind Netflix’s global subscriber growth. Moreover, the company’s effort to strengthen regional programming has been a major growth driver behind international expansion. Notably, Netflix is working on projects across India, Mexico, Spain, Italy, Germany, Brazil, France, Turkey and the entire Middle East.

In addition to its original content investments, Netflix is also looking to distribute its content outside its streaming platform to gain wider audience appeal.

Netflix, Inc. Price and Consensus

Netflix, Inc. Price and Consensus | Netflix, Inc. Quote

Netflix’s New Content Distribution Strategy to Aid Growth

In a unique move, Netflix will release three high profile films — Roma, The Ballad of Buster Scruggs and Bird Box in a few theaters in the Unites States and overseas, ahead of their release on the streaming platform, per Reuters.

This comes after major directors, exhibitors and others reportedly expressed concerns over how their content is made available only on small screens. We expect Netflix’s new strategy to win projects that require theatrical releases, which may not see enough success on small screen.

Additionally, theatrical releases are expected to boost the company’s merchandising business aimed at promoting consumer products related to its popular titles. The company is following the footsteps of Disney DIS, which is boosting merchandise sales on the back of blockbuster franchises.

However, Amazon AMZN has a first-mover advantage as it has already released movies in theaters prior to their release on Prime. Moreover, the e-commerce giant’s plan to acquire Landmark Theatres, which has more than 50 theaters in the United States, is likely to disrupt Netflix’s dominant position in the market. 

Further, Apple AAPL is likely to launch a low-cost streaming TV dongle to support its upcoming streaming service to sell a standalone subscription for its original content.

We believe Netflix’s strategy to focus both on content and distribution techniques may help it strengthen its global subscriber base amid stiff competition.

Netflix currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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