Last year, investors fretted that Netflix (NASDAQ: NFLX) was spending hundreds of millions of dollars on just a few original series--House of Cards being the most notable, and expensive, example. But as competitors like Amazon (NASDAQ: AMZN) wade into the content waters, it's becoming clearer that Netflix's head start will keep it on a growth path.
"Netflix growth is the engine driving profit," nScreenMedia analyst Colin Dixon wrote in a blog post this week. But competition for subscribers is now impacting that key growth metric. To keep people signing up, "Netflix is entering the next phase in its evolution as a worldwide entertainment company," Dixon said, with content as a primary strategy.
Those original series are combined with some innovative marketing tactics. Netflix recently paid The New York Times to place an interactive feature in its BrandStudio section titled "Women Inmates: Why the Male Model Doesn't Work." The piece discussed ways the U.S. prison system can better help its soaring female population--from clothing to women-oriented training programs--but it was also clearly tied into the premiere of the second season of Orange Is The New Black.
The SVOD provider's signing of talk show host and comedian Chelsea Handler signals another content shift. While Dixon doesn't think Netflix is going to jump into live streaming anytime soon, a topical talk show with a short shelf life is a change from the provider's library of long-term titles. "Handler might be a better fit for Netflix than at first it appears. Her show, slated to premiere in 2016, would be a natural place to promote all of the originals the company is producing," Dixon wrote.
Netflix is also broadening its content choices, with a Hispanic-language sports comedy slated for next year, and a Marvel-licensed series, Marvels Daredevils, on tap, among others.
The provider is also continuing its global expansion, with plans to launch in several more European countries and a firm foothold in Latin America. A deal with Deutsche Telekom is reportedly in the works that would see Netflix integrated with the carrier's Entertain IPTV service. If true, it would give Netflix access to DT's 17 million broadband customers and 143 million mobile customers and could cement its place in Germany's online video market.
Chelsea Handler signs with Netflix, plans on-demand talk show
A closer look at the billions of dollars Netflix, Amazon and Hulu are spending on original content
Euro-focused Netflix nears deal with Deutsche Telekom