) has entered into a multi-year deal with
DreamWorks Animation SKG, Inc.
), enabling it to stream over 300 hours of new programs based on
characters from the latter's portfolio of popular films. Netflix
will air these shows in 40 countries from 2014.
Buoyed by this news, Netflix's shares jumped 7% yesterday,
continuing its dream run over the last couple of months. In the
last six months, shares of Netflix have risen an astounding
The current deal comes at an opportune moment for Netflix as
) has significantly increased its attempt to garner new shows
through licensing deals with
) and other production houses. It is worth noting that Netflix's
streaming deal with Viacom expired at the end of May 2013.
In February, Netflix announced that it would stream an
original series, Turbo: F.A.S.T. (Fast Action Stunt Team),
exclusively for kids in collaboration with DreamWorks. This
original series will be available for streaming from December in
the U.S. and abroad.
Video streaming companies have recognized that kids make up a
significant chunk of TV show and film viewers. To capitalize on
this opportunity, Netflix launched its exclusive Internet video
streaming service for kids, 'Just for Kids,' in 2011.
On the other hand, Amazon has also been expanding its video
library with shows meant for kids. It has recently decided to
produce five original TV series, including three children's
Netflix's growing offerings in the original program series is
expected to diversify its online content and help it stand out
from other streaming content providers. We believe that these
initiatives will be incrementally beneficial for the company,
helping it to add new subscribers and retain the older ones,
This is indicative of the fact that in the last-reported
quarter, Netflix added 2.03 million streaming subscribers in the
domestic market and 1.02 million subscribers in the international
However, higher costs owing to international ventures and
licensing fees and continued subscriber losses in its DVD
business are near-term headwinds. Loss from the international
business, due to higher content and marketing costs, is another
concern in the short term.
Nonetheless, we believe that new streaming content deals and
its original content portfolio should be able to entice new
subscribers both in the U.S. and International markets.
Currently, Netflix has a Zacks Rank #3 (Hold).
AMAZON.COM INC (AMZN): Free Stock Analysis
DREAMWORKS ANIM (DWA): Free Stock Analysis
NETFLIX INC (NFLX): Free Stock Analysis
VIACOM INC-B (VIAB): Free Stock Analysis
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