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Netflix (NFLX) Tops Non-Game Apps per SensorTower '17 Report

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Netflix Inc (NFLX - Free Report) topped the list of overall non-game apps by revenues across Apple’s (AAPL - Free Report) App Store and Alphabet’s (GOOGL - Free Report) Play Store in 2017, per the latest report by SensorTower.

Per the report, Netflix is the top revenue earner across Apple App Store in the non-gaming category. However, it ranked sixth on Play Store, trailing HBO NOW, which ranked fifth on the platform.

Per the estimates of the firm, as reported by TechCrunch, Netflix’s gross subscriber revenues increased 138% year over year to $510 million in 2017, which is more than double of what users spent in 2016.

Original Content Drives Growth

Netflix is on a growth trajectory, gathering momentum not only on its home turf but also in international markets. Netflix's core strength in providing a diverse portfolio of original content is anticipated to draw more subscribers in the coming days.

Notably, shares of Netflix have gained 65.5% in the past year, substantially outperforming the industry’s 18.7% rally.

Netflix’s investment in producing films is also beneficial for the company. The company’s portfolio of original films improved with the addition of Death Note, Naked and To the Bone to its platform in the third quarter.

Per Nielsen data, which was quoted by Bloomberg, Bright released in December and starring Will Smith and Joel Edgerton with a budget of $90 million attracted 11 million views in the first three days of release. Given its popularity, the company announced a sequel.

Moreover, the web series launched by the company in the fourth quarter of 2017 like Stranger Things 2, Dark and The Crown Season 2 are gaining popularity worldwide.

In our view, the company’s efforts to attract viewers through increased investments in regional programming are positive as this is expected to expand its international presence as the domestic market approaches saturation.

We note that at the end of the last reported quarter, Netflix's paid streaming members across the globe increased 24.9% year over year to approximately 104 million. This was driven by 10.5% and 43.2% year-over-year increase in paid members in the Domestic and International Streaming Segment, respectively.

Netflix has over 109 million total subscribers globally.  We believe continuing subscriber addition and expanding content portfolio are the key catalysts that will help Netflix to sustain growth going forward.

However, stringent competition from established players like Amazon Prime, Hulu and HBO is a major headwind.

Moreover, Apple and Facebook are also gearing up to boost their original content portfolio, which poses a threat to the company.

Zacks Rank & Stock to Consider

Netflix carries a Zacks Rank #3 (Hold).

A better-ranked stock in the broader technology sector is NetApp Inc. (NTAP - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Long-term earnings growth rate for NetApp is projected to be 11.3%.

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