Netflix Focuses on Beefing Up Its Original Content

Netflix Surprises Investors: Beats All Earnings Estimates in 1Q15 (Part 2 of 5)

(Continued from Part 1)

Netflix continues to have an impressive content pipeline

In the last part of this series, we discussed how Netflix (NFLX) managed to gain new members at a better-than-expected rate. Netflix credits this growth to the ever-improving content, especially its original content. During the first quarter, Netflix launched the third season of House of Cards and new shows Unbreakable Kimmy Schmidt and Bloodline. The shows were a success.

Netflix also released three new original movies—PeeWee’s Big Holiday, Jadotville, and Beasts of No Nation. The company’s future pipeline also looks impressive. Netflix plans to debut Grace and Frankie, Sense8, and the third season of Orange is the New Black in the June quarter.

Partnership with Disney is helping Netflix

During the 1Q15 earnings conference call, Netflix thanked its partnership with Disney (DIS). It’s helping Netflix acquire more content. Netflix entered into a multiyear deal with Disney in 2012 for the exclusive rights to show Disney movies. To counter this threat from Netflix, Amazon (AMZN) also entered into a multiyear deal with Time Warner’s (TWX) HBO in April 2014. The deal gives Amazon Prime members access to HBO content.

Despite the threat from Amazon, Netflix remains the leading paid video subscription service in the US. This finding was confirmed by a report from comScore. The report mentioned that about 42% of US households subscribed to the paid digital video subscription service as of August 2014. It also mentioned that 32% of total households subscribed to Netflix while 19% subscribed to Amazon Instant Video. Hulu Plus saw subscriptions from 9% of households.

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Continue to Part 3

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