Back to top

Image: Bigstock

Is "Stranger Things" Netflix's Next Breakout Hit?

Read MoreHide Full Article

If you’re like me, the summer isn’t just a great time for outdoor activities, it’s also a great time to binge watch shows on Netflix (NFLX - Free Report) . I’m also not afraid to admit that I think every season throughout the year is a good time to binge watch Netflix. I just really like binge watching shows… okay? Let’s move on.

We’re now at a point in the summer where you might be running out of things to watch. If you need something new to binge, Netflix just delivered its latest fan favorite: Stranger Things, a sci-fi drama starring Winona Ryder, David Harbour, and a lengthy roster of child actors.

The plot seems simple at first. When 12-year-old Will Byers disappears, his mother Joyce (Ryder) and the local police chief (Harbour) set out to find him. Once you throw in a mysterious telekinetic young girl and a bunch of dark supernatural forces, however, the interesting world of Stranger Things starts to take a more unique shape.

The show is receiving tons of critical acclaim, and fans have described the tone of the show, which is set in the 1980s, as Spielberg meets Stephen King. All eight episodes of the Netflix-original’s first season are available on the streaming service right now, and it currently holds a 9.2/10 rating on IMDB.

And it’s not like Netflix was short on hits. Earlier this year, the cultural sensations that are Orange is the New Black and House of Cards both saw the release of their new seasons, and both saw even more Emmy nominations and fan praise. Add in the cult followings of shows like Narcos, Bloodline, Marvel’s Daredevil and Jessica Jones, Unbreakable Kimmy Schmidt, and BoJack Horseman, and it’s pretty easy to see that Netflix’s venture into original programming has been successful.

Of course, that evaluation does depend on what your definition of successful is. While Emmy nominations and die-hard fans are nice, Netflix also has a responsibility to provide value for its shareholders, and even the company itself has admitted that the costs of its original programming were partly responsible for its recent price hike.

Original production has not been the only cost for Netflix, however. The company pursued aggressive international expansion in 2015, and with that came a doubling in overseas losses on the year. Content licensing and marketing costs are the big costs associated with international expansion in the streaming industry.

With that said, Netflix’s original programming actually saves the company a bit of cash in its new markets. Netflix doesn’t have to negotiate new licensing deals for its own content. Instead, the only thing Netflix has to do with its original programming in new countries is to make it available in other languages.

Either way, Netflix’s international expansion is basically over right now. There are about 195 countries in the world, and Netflix currently operates in 190. As it establishes itself in these new markets, costs associated with international operations should go down.

In the meantime, Netflix will need to keep churning out hits like Stranger Things. It appears that Netflix is comfortable with favoring its own programming over licensing other shows, and that’s fine, as long as the company continues to produce fresh, high-quality entertainment that will attract new customers and retain old ones, even in the face of price increases.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 DaysClick to get this free report >>


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Netflix, Inc. (NFLX) - free report >>