In a streaming world where content is king, Netflix (NFLX) will rely on its heavy hitters in order to compete.
According to a new note from Bank of America, "Stranger Things," "Ozark," and breakout 2020 hit "Bridgerton" are among the "most important" shows for the streaming giant.
The bank's analysts added "The Witcher," "Money Heist," "Cobra Kai," and "Lucifer" to the list, helping to bolster already strong app downloads as competition stiffens with Apple (AAPL), Disney (DIS) and Warner/Discovery's (T) fledgling yet formidable HBO Max platform.
Other hot Netflix originals like "You" and "Sex Education" will debut new seasons this fall, with an upcoming content slate that "so far seems solid compared to other platforms," the note added. Bank of America explained that there could be even more additional content announcements during the company's global fan event this September.
On Wednesday, Netflix shares rose above 3.5% to a fresh high, the company's first record close since January, on news that the sitcom “Seinfeld” would begin streaming on the platform beginning October 1.
The hidden value of franchises
Still, upcoming releases on rival platforms like "The Morning Show" season 2 (Apple TV+), the new "Dune" movie (HBO Max), and Marvel's "Shang-Chi and the Legend of the Ten Rings" (Disney+) will offer up some competition, Bank of America cautioned.
So far, Disney+ seems to be the one to beat, with the platform amassing 116 million global subscribers since its November 2019 debut.
"Disney's value is its franchises," Nat Schindler, research analyst at Bank of America, told Yahoo Finance during a recent interview.
The entertainment behemoth is "driving their entire use case based on Star Wars, Marvel and Disney princesses — and those are powerful," he added.
However, the analyst went on to say that consumers generally "don't watch networks....they watch shows."
"What matters is what content is on a network. If a consumer wants to watch 'Stranger Things' then they have to watch it on Netflix. There is no other option. Alternatively, if they want to watch 'WandaVision' they have to watch it on Disney+," Schindler explained.
He added that the difference between Netflix and other streamers comes down to "the amount of content they release and how broad they can get."
And Netflix seems to be broadening out its target audience even more — with a few key announcements this past summer. In August, the company confirmed its expansion into video games, hiring a former Electronic Arts (EA) and Facebook (FB) executive to lead the effort.
Furthermore, in June, Netflix launched the Netflix Shop — an online marketplace where customers can buy exclusive limited edition apparel and lifestyle products tied to the platform's shows and brand.
"Count me as one of the guys who's very skeptical on this over belief in these new businesses," Schindler said.
"When they came out with their big talk about moving into gaming, they caveated and said that it will be mobile gaming about their current content — this is marketing, as is the Netflix Shop," he continued.
"They're not going to make a lot of money or anything that really moves the needle selling 'Stranger Things' merch, but that merchandise might get people excited about 'Stranger Things' and thus subscribe to Netflix," the analyst surmised.
It's just much easier to monetize content [through subscriptions]Nat Schindler, Bank of America Analyst
Netflix made recent headlines after rescuing NBC's "Manifest" following the show's abrupt cancellation in June after just three seasons.
On August 28, the streamer announced it had renewed the show for a fourth and final season — much to fans' delight.
Although rare for a canceled show to get picked up again, Netflix is known for its power to revive and elevate content — similar to "You," which was largely ignored on Lifetime before exploding on Netflix.
"It's just much easier to monetize content" through subscriptions than ad dollars, Bank of America's Schindler said. He explained that if a show falters on a TV network it's often difficult to generate ad money and, therefore, justify the usage of that slot.
"But there are no slots on Netflix and if the dollars can justify it by bringing in subscribers, then it's worth it to them," he continued. Streamers can often "expand the value" of crowd-favorites by reaching a much wider audience as well.
Alexandra is a Producer & Entertainment Correspondent at Yahoo Finance. Follow her on Twitter @alliecanal8193
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit
