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AMC Networks (AMCX - Snapshot Report) Breaking Bad season finale received a great response as 5.9 million viewers (soared 102% from the last season) watched the first of the eight episodes on Aug 11. The strong jump in viewership can be attributed to the buzz created by the availability of all the past seasons on Netflix (NFLX - Analyst Report), prior to the start of the final installment.

The streaming of all the past seasons helped new viewers to catch up with Breaking Bad. The first episode was watched by 3.9 million viewers in the age bracket of 18-49. This is second only to AMC’s most popular show The Walking Dead, which is also available on Netflix.

The first episode of the season finale is already available to Netflix subscribers (within approximately 12 hours of the US premiere), thanks to an agreement between the company and Sony Pictures, the producer of Breaking Bad.

We believe that Netflix’s instant streaming of the show is an attempt to curb piracy, particularly in regions where US premiered shows take time to release. Although it’s difficult to gauge the effect of this move on piracy, it will certainly boost traffic on Netflix.

Moreover, the recent move reflects Netflix’s continuing focus on developing its subscriber base through content acquisition and production of original shows. Netflix’ partnerships with the likes of AMC, Fox Television Studios, CBS Corp (CBS - Analyst Report), PBS Distribution and DreamWorks have helped the company to offer a variety of shows.

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.

Reportedly, 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 Amazon (AMZN - Analyst Report), 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 over dependent on the streaming service for further growth. However, rising competition will negatively impact streaming revenues going forward.

Currently, Netflix has a Zacks Rank #3 (Hold).

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