Netflix to Gain From Expanding International Content in 2020
Netflix NFLX has expanded its presence to 190 countries and won subscribers rapidly, owing to growth in regional content, its award-winning portfolio, and partnering the top local content creators and artists, with some of them turning out to be huge hits.
The company is working on projects across Mexico, Spain, Italy, Germany, Brazil, France, Turkey and the entire Middle East to drive international subscriber growth.
Notably, Netflix stated that local originals were the most popular titles in many countries, including India, Korea, Japan, Turkey, Thailand, Sweden and the United Kingdom in 2019.
Moreover, La Casa de Papel (Money Heist) appeared on Netflix’s top ten lists in more than 70 countries. The company also witnessed strong demand for Korean content.
Netflix, Inc. Price and Consensus
Netflix, Inc. price-consensus-chart | Netflix, Inc. Quote
Expanding International Content Portfolio in 2020
Netflix is expected to benefit from international content deals and expanding content portfolio in 2020. The streaming giant recently announced the release of Pokemon: Mewtwo Strikes Back—Evolution, the CGI remake of 1998 film Pokemon: The First Movie.
Slated to debut for Netflix subscribers globally on Feb 27, excluding Japan and Korea, the feature film follows the excursion of Ash and his companions as they get caught in a round of Pokemon's vengeance.
Additionally, the company is set to release 21 films from Studio Ghibli, the Academy Award-winning Japanese art house on Feb 1 worldwide, excluding the United States, Canada and Japan. The films will be subtitled in 28 languages and dubbed in more than 20 languages.
Netflix subscribers in the Asia Pacific, Europe, the Middle East, Africa and Latin America will be able to watch classics such as Academy Award-winner Spirited Away, Princess Mononoke, Arrietty, Kiki’s Delivery Service, My Neighbor Totoro and The Tale of The Princess Kaguya in their native languages.
Moreover, some recently-announced projects of Netflix include the multi-year pact with Nickelodeon for animated originals, a multi-year film and TV deal with creators of Game of Thrones, David Benioff and Dan Weiss.
Further, Netflix has also signed a three-year deal with South Korean media conglomerate CJ ENM’s Studio Dragon for originals and licensed titles as well as a pact with Korean producer JTBC Content Hub.
Expensive Content Strategy Concerns
The company’s focus on streaming regional content has been leading to international growth. In fourth-quarter 2019, it added 8.33 million paid international members, up 14% year over year.
During the quarter, Netflix debuted a record 802 hours of original programming, including Oscar contenders The Irishman and Marriage Story, per Deadline Report. The said metric was up 3% year over year.
However, increased spending on new content is expected to hurt cash flow generation as the company is likely to spend $17.3 billion on content in 2020 as forecasted by BMO Capital Markets, per Variety Report.
Notably, the company raised $1 billion 4.875% senior notes and €1.1 billion 3.625% senior notes, both due in 2030, in the reported quarter.
As the company continues to finance its original content, investors can expect the new projects to weigh on its bottom line.
Further, intensifying competition in the streaming space from the likes of Amazon’s AMZN Prime video service, Disney’s DIS Disney+, Apple’s AAPL Apple TV+, AT&T’s upcoming HBO Now, and Comcast’s upcoming Peacock has become a major threat to Netflix’s dominance.
Zacks Rank
Netflix currently has 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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