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Netflix, Inc. (NFLX),, Inc. (AMZN): Is Original Content a Game Changer?

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In a bid to build brand equity and differentiate their services from the rest, video streaming companies, especially the Internet kind, are racing to build-out original content. Original content harnesses the company’s brand value and gets a lot of press attention, which aids in harnessing near-term subscriber growth. Internet TV first mover, Netflix, Inc. (NASDAQ:NFLX) is investing heavily in original content, to maintain its huge lead over streaming competitors.

Even though Netflix, Inc. (NASDAQ:NFLX) didn’t disclose the success, or lack thereof, of its dramatic original show, “House of Cards,” the buzz on the web clearly pointed towards a very strong reception and a successful investment for Netflix, Inc. (NASDAQ:NFLX). It’s almost impossible to know the new subscriber additions from the original series before Q1 F’13 results come in, a mere guess would be quite a handful. The strategic shift from being a video distributor to a content producer enhances the investment case for Netflix, Inc. (NASDAQ:NFLX) even more.

Netflix’s chief content officer stated that the goal of Netflix, Inc. (NASDAQ:NFLX) is to not to dismantle TV, but to evolve the experience. Consider that House of Cards is the most watched show on Netflix, Inc. (NASDAQ:NFLX) worldwide in terms of hours viewed across the globe. Also, the recent integration of Facebook and Netflix, will aid in getting free publicity and drive more viewer hours, but is unlikely to aid in bringing in material amounts of new subscribers from the current level of 33.3 million subscribers.

However, with a strong list of original shows coming on Netflix in 2013-2014, even small amounts of sharing on a social media platform like Facebook will appeal to curious on-lookers.

The star-studded “House of Cards” got a lot of press attention, and has been a big hit amongst Netflix’s subscribers. However, the visionary Reed Hastings isn’t overly convinced that it will pave the way for Netflix to evolve into an original programming company yet. Hastings believes that his firm will churn out a number of big franchises over the 5-10 years and that it can be quite material to Netflix’s net subscriber additions, which could get a material boost.

It is reasonable to believe that the growth in subscribers to more than 50-60 million in the next few years can be achieved.  Netflix is getting ready to launch a number of original shows throughout 2013, and in 2014 as well. With so many headlines and a differentiated service due to original content, Netflix will stand-out from the crowd.

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