In a recent Morgan Stanley survey, Netflix has been voted as the “best” original content media company compared to any other premium TV or internet-video subscription service. HBO had occupied this position for several years, but is now in second place by a large margin. Of the respondents to the survey, 29% voted for Netflix as the best in original programming, with HBO getting only 18% of the votes. Amazon was in the 4-5% range. THe appeal of this content to Netflix subscribers should not be underestimated. Netflix will be increasing its subscription charges for a significant number of its users, as their two year grace period ends. We believe, though, that original programming is ensuring that users are hooked to Netflix despite the increase. (Read Can An Increase In Subscription Rates Impact Netflix’s Subscriber Growth). In fact, a survey by investment bank SG Cowen revealed that 58% of subscribers pay for Netflix for its original shows. This number is up from 37% in December 2014, indicating the popularity of its shows. Netflix’s content acquisition spending has been highest among competitors in recent years and we believe this investment is paying off, enabling the company to retain and increase its subscriber base.

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