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Is Netflix Walking Wounded or Walking Dead?

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Everyone's been arguing that Netflix (Nasdaq: NFLX  ) has been missing a brain in recent weeks, so why not call in the zombies?

AMC Networks' (Nasdaq: AMCX  ) freshman season of The Walking Dead will begin streaming through Netflix today for subscribers in the United States and Canada. Future seasons will be added to Netflix's growing digital catalog just before the premiere of subsequent seasons.

It's a win-win deal. The second season of the critically acclaimed apocalyptic zombie series debuts a week from Sunday on AMC, so the network will be able to get new audiences up to speed on what they missed during the inaugural season. Netflix benefits by fattening its content offerings during a very sensitive time.

It's not just The Walking Dead moseying on over to Netflix's virtual screening room in this deal. Several of the shows on AMC's IFC, Sundance Channel, and WE tv networks -- including Portlandia, Braxton Family Values, and Bridezillas -- will be filling up Netflix's instant streaming queues.

The deal is similar to the renewed and expanded contract that Netflix signed with Discovery Communications (Nasdaq: DISCA  ) (Nasdaq: DISCK  ) last month, giving viewers a broader breadth of niche programming from second-tier cable networks.

Netflix will still need to fill the Liberty Starz (Nasdaq: LSTZA  ) void when it comes to theatrical content.

When apologists argue that Netflix does have new releases available through its streaming service, they typically point to Starz titles including Tron: Legacy, Toy Story 3, and Let Me In. That deal expires in three months. Outside of DreamWorks Animation (Nasdaq: DWA  ) for some computer animated fare -- and that deal doesn't kick in until 2013 -- Netflix is lacking the streaming access to new releases that drives its original disc-based business.

Netflix revealed earlier this week that more than half of its streaming usage is now being devoted to television shows. It may be the marquee content that studios are willing to hand over to Netflix -- knowing that it will promote fresher episodes that air first on the networks -- but Netflix can't afford to become just another Hulu Plus.

There's clearly nothing wrong with today's AMC Networks deal. Netflix is a better streaming service with The Walking Dead today than it was yesterday without it. However, it's time for Netflix to start thinking outside of the box -- and inside the box office.

 If you want to follow this saga, track the latest news by adding Netflix to My Watchlist.

Motley Fool newsletter services have recommended buying shares of Discovery Communications, DreamWorks Animation, and Netflix, as well as creating a bear put spread position in Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz has been a Netflix subscriber and shareholder since 2002. He does not own shares in any of the other stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

Read/Post Comments (6) | Recommend This Article (4)

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  • Report this Comment On October 07, 2011, at 1:19 PM, mighty88 wrote:

    Jim Chanos the famous Hedge fund shorter, who predict Enron, EK, AOL downfall is short on NFLX.

    Read his position on a book foe Hedge Fund, about his reason.

  • Report this Comment On October 07, 2011, at 4:15 PM, cfrdog wrote:

    Agree, nobody cares that much about TV shows.... Netflix isn't cool anymore.

  • Report this Comment On October 07, 2011, at 5:05 PM, vinbaba99 wrote:

    You have not stated whether it's a buy or sell, The big hit to NFLX came after increasing their price by 60% 'cause analyst were expecting a huge subscriber growth.

    PS. I was one of those planning on subscribing until the huge increase in cost. I guess some execs did not learn anything from Steve Jobs' iTunes and $0,99 song download.

  • Report this Comment On October 08, 2011, at 7:42 PM, nhalden wrote:

    It's not new if I can possibly see it On demand, HULU, or DVD.

    GOOD for them to get "new content" - new to them...but it's not NEW that it's on TV and after it airs's now on NF. (day after...10 days later etc..)

    STARZ did that with Spartacus and was a huge draw...eventually thye made NF wait 90 days...STILL WAY BEFORE ANYONE ELSE...but those days are gone...

    NF rallied based on trading and nothing else this week just to close low....this is a SELL.

    A buy at or around $90/share

  • Report this Comment On October 08, 2011, at 8:19 PM, MINNION wrote:

    I think that NFLX magical moment is over. I cancelled my subscription. Now its time to cancel the stock!

  • Report this Comment On October 10, 2011, at 2:50 PM, dameyoppa wrote:

    This is why I use free movies free games free music. you cant beat that!

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