Netflix (NFLX - Free Report) is bringing a five-episode interactive narrative series called Minecraft: Story Mode this fall by partnering with videogame developer, Telltale Games.
Although the company has interactive storytelling titles on its platform, this is the first time that it is working with a video game developer on such projects.
However, the company denied bringing gaming on the platform. Rather, it says that it uses games as a marketing tactic to draw audiences.
Reportedly, Telltale Games is creating a video game based on Netflix’s highly popular original series Stranger Things, not for the platform, but for consoles and PCs.
The company said, “We’re looking to establish an interactive licensing program to help amplify fervor around key titles by developing a new way for fans to experience our titles off the Netflix service.”
Netflix seems to be cashing in on the growing popularity of video games to target various age groups and keep their interests alive.
Subscriber Addition a Tailwind
Netflix’s growing subscriber base helps it generate significant revenues. The company’s strengthening content portfolio is helping it add more and more subscribers to its platform in spite of an increase in subscription. More specifically, its robust international original content portfolio has been the key growth driver in recent times.
Notably, paid members in the domestic segment and international segment increased 11.6% and 41.8%, respectively, from the year-ago period in the March quarter.
Moreover, a recent survey by Piper Jaffray, which involved 1.1k domestic subscribers, showed that most of them have no problem paying more for the service. The firm says that when compared with the 2016 survey, subscribers’ willingness to pay more has increased considerably.
The huge amount that the company is spending on beefing up its content portfolio is actually translating to an increase in subscriber base.
Goldman Sachs analyst Heath Terry expects the company’s sales growth to outpace its content spend in 2019, adds Bloomberg. Moreover, he also anticipates the company’s free cash flow to turn positive in the near future.
Given the positive outlook on the stock, the analyst raised the price target by $100 to $490, which is nearly 30% more than the current stock price.
The bullish sentiment on the stock is further reflected in its share price movement. Notably, shares of Netflix have gained 97.9% year to date, significantly outperforming the industry’s 28.2% rally.
Zacks Rank & Stocks to Consider
Netflix currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include NVIDIA Corporation (NVDA - Free Report) , Micron Technology, Inc. (MU - Free Report) and Twitter (TWTR - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for NVIDIA, Micron and Twitter is projected to be 10.3%, 10% and 23.1%, respectively.
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