While Netflix‘s Q2 2016 results were disappointing, with its subscriber growth falling significantly short of its guidance, the company’s focus on original content is proving to be a winner. It’s new after show “Stranger Things” was named the most popular digital original series in the U.S. for the week of July 17 to 23 by Parrot Analytics. This show in the first week after its release has become more popular than the company’s immensely popular title “Orange is the New Black” with over three times the demand. As competition in the streaming media becomes intense, Netflix is relying on its ability to create original content to retain and grow subscribers. According to our estimates, the company’s U.S. streaming segment accounts for nearly 70% of its valuation and growth in subscribers is a key driver for this segment. While Amazon and YouTube Red are looking to create a dent in Netflix’s market share, the popularity and success of its shows will ensure that Netflix continues to retain and grow subscribers in the U.S. for the next few years, in our view.
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