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Are Netflix Recommended TVs A Marketing Gimmick?

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Are Netflix Recommended TVs A Marketing Gimmick?

Netflix, Inc. (NASDAQ: NFLX) is getting into the TV recommendation business. The streaming video giant has officially endorsed select TVs from Sony Corp (ADR) (NYSE: SNE), LG, TCL, Hisense and Insignia.

These manufacturers -- and others in the future -- will get to display the "Netflix Recommended TV" logo at retail, which might make investors wonder: is this whole thing a marketing gimmick?

"It's fine for the next three quarters," Cody Willard, chairman of Scutify (a financial social network), told Benzinga. "For the rest of this year, that's fine."

But as "big and powerful" as Netflix has become, Willard said that the app revolution that's driving its success is independent of a TV that received the company's seal of approval.

"I have a smart TV from Samsung and DISH satellite [service]," said Willard. "I get Netflix with the Samsung TV and I get it with my satellite dish. It doesn't even matter if the TV's been approved by Netflix or not because, increasingly, I'm going to be able to access the Netflix content through the set-top box or through [other devices]. Chromecast makes this sort of discussion irrelevant anyway."

Willard may not be a fan of the concept, but he did say that it "gets the Netflix name on some displays in Best Buy."

"That's worth something," he added. "Advertising."

Related Link: Exclusive: Dish Network Exec Explains How Amazon Will Help It Dominate An Industry

Good For The Brand

Global Equities Research analyst Trip Chowdhry thinks this was a smart move for Netflix now that several other streaming video services have entered the fray.

"The market is getting congested right now," Chowdhry told Benzinga. "If you look at it, it's the fight to be a first-class citizen or a second-class citizen on a device."

By that he means app placement and usage. If the other streaming video services take precedent, Netflix may not be able to maintain its status as the dominant player.

"Now Netflix is just another icon," he explained. "How do you become the very first and prominent icon that is a channel or a brand among many others? This is the only strategy that makes sense. I wouldn't call it hype, but it is a good brand-building and affiliation exercise that differentiates Netflix from others."

Chowdhry said that these services are in for a rude awakening if they believe their content will be self-discovered.

"There's so much information, so much entertainment, on multiple devices on multiple occasions," he added. "You have to come on top of it. I think what Netflix is doing makes a lot of sense from that perspective."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Posted-In: Cody Willard Global Equities Research Hisense InsigniaAnalyst Color Top Stories Exclusives Tech Best of Benzinga

 

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