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Netflix (NFLX) to Come Up With New Production Hub in Mexico


Netflix NFLX recently announced plans to open a production hub in Albuquerque, Mexico.

The company is close to finalizing a deal to purchase ABQ Studios in Albuquerque, currently owned by Pacifica Ventures. Notably, some blockbusters filmed at ABQ Studios include The Avengers, Sicario, Breaking Bad and The Lone Ranger.

Following the completion of the acquisition, Netflix is expected to create up to 1000 production jobs and bring $1 billion in production money to Albuquerque over a span of 10 years.

Apart from this, the company also established a production hub in Madrid, Spain on July 2018.

Productions Scheduled in Mexico

Netflix’s current productions in Albuquerque — Chambers and Messiah — have provided jobs to more than 700 local crew members.

Additionally, post the deal, the company’s other film and television series, including Daybreak, will be produced in the new facility along with other locations in the state. Earlier productions in New Mexico include Longmire, The Ridiculous Six and Emmy award-winning series Godless.

Notably, to boost the economic situation of the country, the state of New Mexico and the city of Albuquerque will extend funds through the Local Economic Development Act (LEDA). While the state will provide up to $10 million, the city will provide up to $4.5 million.

This depicts Netflix’s ability to create value not just for the company but for all the stakeholders involved, which is a positive for the stock. The stock has gained 81.8% in the year-to-date period compared to the industry’s rally of 28.4%.

We believe that Netflix has a first mover advantage with investments in both content and production facilities.

Moreover, growth in the company’s 130 million global subscribers despite increase in Netflix average selling price (ASP) reflects the strength of the company’s Emmy award-winning content.

Netflix, Inc. Revenue (TTM)

Netflix, Inc. Revenue (TTM) | Netflix, Inc. Quote

Competition Picking Up

However, competition from other streaming service providers and video sharing platforms like Amazon AMZN Prime and Alphabet’s GOOGL YouTube is intensifying.

Amazon is also investing heavily in original content. For fiscal 2018, the company is expected to spend $4.5 billion on original content, of which, a significant amount will be spent on European content.

YouTube, which remains a dominant player particularly in India, is pushing aggressively into original content in a bid to double its user base and adoption rate. Additionally, the company is planning to unveil its ad-free paid streaming platform, YouTube Premium, in India.

Moreover, entry of players like Apple AAPL and Disney will further intensify competition.

Netflix currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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