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What Are Netflix’s New Technological Initiatives?

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Netflix is interested in virtual reality

On February 25, 2016, a Variety report, citing a Trusted Reviews report on the Mobile World Congress conference in Barcelona, said that Netflix (NFLX) is very much interested in virtual reality (or VR).

According to another Variety report from last year, Hulu also indicated its interest in VR. The company “will produce original content and curate films for VR platforms.” Last year, Netflix also developed an app along with Facebook’s (FB) Oculus VR for “Samsung Gear VR” featuring the “Netflix Living Room.”

According to another Mobilesyrup report on February 24, Netflix disclosed some of the products and plans that it is working on this year including adding “second screen support” to its mobile app on Apple’s iOS (AAPL) and Alphabet’s (GOOG) operating system.

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What is second screen support?

When a Netflix user using the company’s iOS and Android mobile app activates the second screen experience for a TV show or movie, the user will be able to view details about the show including a short biography of the actors.

4K and HDR

The company is also working on providing technical support for HDR (high dynamic range) video content, the next level of high-resolution video. However, HDR is “not supported by most recently released 4K televisions.”

Netflix has stated that it intends “to spend over $800 million on technology & development in 2016.” Earlier this year, Netflix also indicated that it’s shifting to HEVC (high-efficiency video encoding) h.265 technology from h.264 to enable it to stream 4K video content at low bit rates. Netflix stated that Alphabet’s YouTube is another company that has “made great progress” using h.265 technology.

When Netflix first introduced content for UHD (ultra high-definition) television sets, 4K televisions were an expensive affair. However, as prices of UHD TVs continue to fall, more people are opting for this option. According to a Quartz report dated January 20, 2015, 4K televisions will make up 57% of total TV sets produced globally by 2018.

In the next part of this series, we will explore why Netflix is undertaking these new technological initiatives.

Netflix makes up 0.86% of the PowerShares QQQ Trust Series 1 ETF (QQQ). QQQ has 4.8% exposure to the television and radio sector.

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