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Netflix to Stream Sense 8 in 2014

Zacks Equity Research

Netflix (NFLX) recently announced that it will exclusively stream a new original series Sense 8 for its subscribers in late 2014. The new 10 episode science-fiction thriller will mark the television debut of writer, producer and director duo Andy and Lana Wachowski, the creators of The Matrix trilogy.

Produced by Georgeville Television in association with Studio JMS, the series will bring together Wachowskis and well-known writer and producer J. Michael Straczynski (co-founder of Studio JMS), the creator of the successful television series Babylon5 for the first time.

Netflix did not reveal much details of Sense 8 and only said that the series will be “a gripping global tale of minds linked and souls hunted”. Nevertheless, the association of such a strong creative team promises a mind boggling series.

Amid increasing competition from streaming providers such as HBO, Amazon.com Inc. (AMZN), Hulu as well as newly-launched services from cable and media companies such as Comcast Corp. (CMCSA), Netflix remains focused on boosting its streaming portfolio with varied content. Apart from recent movies and documentaries, Netflix is also boosting its original content portfolio.

Through its original television shows like Arrested Development, House of Cards, Netflix has been venturing into different genres like comedy, political thrillers, autobiographies and horror. Netflix’s recent partnerships with DreamWorks Animation SKG (DWA) will help it to reach out to kids.

We believe that the recent series will further expand Netflix’s customer base going forward. Moreover, Netflix’s partnerships with Fox, a division of Time Warner and Walt Disney will allow it to offer fresh content to its subscribers in 2013. Netflix is expected to stream five original series by 2013 end.

We believe that improving paid subscriber base, international expansions, diversified content portfolio and a huge video library are the positives in the near term. However, higher costs owing to international ventures and licensing fees and continued subscriber losses in its DVD business are near-term headwinds. Mounting losses from the international business, due to higher content and marketing costs, is another concern in the short term.

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

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