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Netflix Expands to the Middle East with Adel Karam Show

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Netflix Inc. NFLX recently announced that it is starting its first regional production in the Middle East. It features popular Lebanese comedian and actor of Nadine Labaki’sCaramel and Ziad Doueiri’sThe Insult fame, Adel Karam. The yet-to-be-named stand-up comedy show is expected to release globally sometime next year.

Reportedly, the show will be produced by Middle East’s first talent agency, Creative Arab Talent and will be staged at Beirut’s famous Casino du Liban, marking the comedian’s first performance at the venue.

Per the company, the show under the garb of comedy will showcase various issues faced regularly by Arabs.

Notably, Netflix has teamed up with a number of A-listers in comedy like Dave Chapelle, Ellen DeGeneres, Adam Sandler and Jerry Seinfeld. The streaming giant also has brought onboard international comedians like Italian Beppe Grillo, Moroccan French comedian Gad Elmaleh and Jack Whitehall, an English comedian, to the platform.


The streaming giant also announced a documentary based on the history of renowned football club from Italy “Juventus FC” in a bid to establish itself as “a sport entertainment brand”. Reportedly, the series will have four episodes spanning an hour each and is set to release early next year.

We believe these efforts will help to sustain the share price momentum of the company. The stock has gained 57.6% year to date, significantly outperforming the industry’s12.5% rally.

International Expansion – A Key Growth Driver

Netflix’s strengthening international original content portfolio has been the key growth driver in recent times. Apart from North America, the company has been doing really well in Latin America and Europe. Netflix is doing considerably well in India and Japan as well and has a lot of room for expansion in other Asian markets. The company’s move into the Middle East region shows its desire to expand further in the region.

The company’s expanding original content portfolio and improving penetration in international markets were the key catalysts behind its strong performance last year. Notably, rapid international expansion has paid off for Netflix, with the company adding substantially more subscribers than what it expected over the last quarter.

Reportedly, 4.14 million new subscribers were added overseas in the last quarter. International Streaming revenues (41.8% of total revenue) soared 53.7% year over year to $1.165 billion driven by an increase in paid members in the last reported quarter. The company expects to have added 3.65 million subscribers in the international segment in third-quarter 2017 ended Sep 30.

Netflix kept the rates unchanged for international subscribers while hiking the price of some of its monthly subscription plans in the United States. We believe the company is wary that any price increase in the overseas markets, which are more price sensitive compared to the United States, can impact subscriber growth.

Per Research firm MarketsandMarkets, the video streaming industry is anticipated to grow from $3.25 billion in 2017 to $7.50 billion by 2022, at a compound annual growth rate (CAGR) of 18.2%.

We believe by taking up more such initiatives to expand regional programming, the company will be able to fend off competition from established players like Amazon AMZN Prime, Hulu and Time Warner’s TWX HBO. Moreover, Apple AAPL is also gearing up to boost its original content portfolio. It recently announced the addition of a Steven Spielberg series to its platform.

Zacks Rank

Currently, Netflix has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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