Netflix Inc. (
recently announced that it has entered into a multi-year
licensing deal with The Weinstein Company ("TWC"). Under the
terms of the agreement, Netflix will exclusively stream TWC
produced movies on a first run basis from early 2016. However,
the financial terms of the transaction were not disclosed.
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The recent deal extends the earlier partnership between the two
companies, which they signed in Feb 2012. Per that deal, Netflix
was able to stream critically acclaimed movies such as The Artist
along with other popular productions including the documentary
Undefeated and the French movie The Intouchables.
In Aug 2012, Netflix signed another multi-year licensing deal
with RADiUS,a multi-platform distribution label from TWC. The
deal allowed Netflix to stream new movies such as Bachelorette,
Only God Forgives, The Details, and Lay the Favorite to name a
The extended partnership will significantly boost Netflix's
content portfolio going forward. TWC is known for producing
award-winning movies made for a niche audience. The current
partnership deal will help Netflix to target this niche customer
base going forward.
Moreover, the recent move reflects Netflix's continuing focus on
developing its subscriber base through content acquisition.
Netflix' partnerships with the likes of
CBS Corp (
, PBS Distribution and
DreamWorks Animation (
have helped the company to offer a variety of shows and movies.
The partnerships have helped Netflix to venture into different
genres like comedy, political thrillers, autobiographies and
horror. Recently, Netflix entered into a partnership with Fox
Television Studios to finance The Killing, a television crime
drama, after its production was cancelled by AMC in 2012.
Beside first run movies, Netflix is considering streaming drama
series Marco Polo, which will join original shows such as House
of Cards, Orange is the New Black, Hemlock Grove and Arrested
Development. Netflix plans to double the number of original
programs in 2014.
Netflix's diversified offerings help it to stand out among other
content streaming providers such as
, HBO and Hulu. Netflix's consumer-friendly strategy helped to
increase its paid streaming subscriber base (both domestic and
international) by 38.6% on a year-over-year basis to 35.6 million
in the recently concluded second quarter.
However, soaring costs of content acquisition remain a major
headwind for Netflix in the near term. As the DVD business
continues to lose subscribers, Netflix remains increasingly
dependent on the streaming service for further growth.
Additionally, rising competition will negatively impact streaming
revenues going forward.
Currently, Netflix has a Zacks Rank #3 (Hold).