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Netflix Inc. (NFLX) Wants to Do for Movies what Amazon Did for Books

Netflix Inc (NASDAQ:NFLX)

Netflix Inc. (NASDAQ:NFLX) is courting indie filmmakers as Netflix continues to expand into the film business. Deadline reports that Netflix is working with indie filmmakers for the launch of new titles in all of Netflix’s market globally.

Netflix Inc Stock Split

The recent indie titles that Netflix has recently bought are “the feature debut of creative studio Walter Robot, a music project starring Sarah Hyland (Modern Family), Graham Phillips (The Good Wife) and Chris D’Elia (Undateable)”. Netflix has also bought the rights to 6 Years, Most Hated Woman in America and Manson Family Vacation. The report also submits that Netflix is seeking out more indie movie projects in a move that will provide a constant stream of content.

What Can Indie Movie Projects Do for Netflix?

Netflix wants to do for the movie industry want Amazon did for books with its Kindle platform. Before Amazon launched the Kindle platform for e-books, many authors were wasting away unknown as they found it hard to get deals from publishers.

It would be hard to compute the number of manuscripts that went straight from the mail into the thrash because an editor somewhere thought they won’t interest readers. The launch of Amazon’s kindle platform changed all that because authors could publish their books with minimal resources and then lead the readers to judge if it is worthy of a read or not.

Now, indie filmmakers can follow their passion, Netflix can then place it on its platform and viewers can decide it the movie is any good. The move provides a constant stream of content for Netflix so that its users will be engaged.

Secondly, the courting of Indie movies leads to lower running costs for Netflix because buying the rights to indie projects are not likely to cost as much as title rights from Hollywood filmmakers would cost.

Thirdly, Netflix gets to make money from both ends of the movie industry. It will see returns on its initial funding for the creation of movies and it would obtain income from subscriptions when such movies keep users glued to Netflix service every month.

Looking forward to Earnings and Revenue

Netflix is set to release its second quarter (Q2 2015) results after the market closes next week on Wednesday, July 15. The consensus estimate is that Netflix will deliver earnings of $0.31 per share on revenue of $1.65B.

The Financial Times reports that the forecast among 43 analysts is that the firm will beat the market. 10 of them have a “Buy” rating on the stock, 13 analysts have an “Outperform” rating on the stock, and 15 analysts think that the stock might pullback, but they advise a “Hold” rating on the stock.

 

Analysts at Pacific Crest have also maintained their “Overweight” rating on Netflix with a price target of $665. Andy Hargreaves of Pacific Crest says you should “hold Netflix shares for long term and recommends drop in the share price, as an chance to buy the stock”.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.

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