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Netflix (NFLX) Expands in South Korea with Original Content

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Netflix (NFLX - Free Report) stock has gained 12% on a year-to-date basis as compared with the S&P 500 market’s increase of 6.3%. The upside can be attributed to the company’s impressive fourth-quarter 2016 earnings results, subscriber growth and expanding original content in overseas markets like South Korea.

Netflix recently announced its second Korean original television series – Kingdom – a historical zombie-thriller drama produced by Astory.

We note that the company’s continued focus on international expansion is driving its top-line growth providing competitive leverage against the likes of Amazon (AMZN - Free Report) Prime. In the latest quarter, it added 5.12 million of new international subscribers and anticipates adding another 3.70 million in first-quarter 2017.



Netflix’s intent to strengthen international original content portfolio has been the key growth driver in recent times. The global popularity of its first Brazilian original show “3%” shows that the company’s strategy of developing regional content and local programming is a success.
 

Netflix, Inc. Revenue (TTM)

 

Netflix, Inc. Revenue (TTM) | Netflix, Inc. Quote

Expansions in South Korea, India: Key Catalysts

Kingdom is expected to be a runaway success as it brings together director Kim Seong-hun and writer Kim Eun-hee – two well-known figures of Korean film and television industry. The eight-episode series will premier on Netflix in 2018.

Early this year, Netflix commissioned its first Korean drama - Love Alarm – which is set for 2018 release. The series will be produced by Hidden Square, led by Lee Jae-moon who is credited with the success of television series like Signal, which was written by Kim Eun-hee.

The back-to-back commissioning of original contents reflects Netflix’s focus on solidifying footprint in South Korea, an important Asian market for the company after Japan and India.

As noted in its fourth-quarter letter to shareholders, Netflix inked a deal with Red Chillies Entertainment, the production company of Indian film star Shah Rukh Khan. The company is also planning to develop original programs based on Japanese anime and Turkish dramas.

We believe that Netflix’s expanding international content portfolio will rapidly drive subscriber growth that will further boost the stock price in the rest of full-year 2017.

Zacks Rank & Other Key Picks

Currently, Netflix carries a Zacks Rank #2 (Buy). ITV Plc (ITVPY - Free Report) and Grupo Televisa (TV - Free Report) are two other favourably placed in the sector carrying the same rank as Netflix. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Long-term earnings growth rate for ITV and Grupo is currently pegged at 3.5% and 17.1%, respectively.

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