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Netflix International Strategy - Making Headway

Netflix announced on Monday that they had attained one million subscribers in the UK and Ireland, only 7 months after launching in the region. The company boasts that this rapid expansion is four times faster than Twitter managed to accomplish globally and twice as fast as Facebook and Four-square. They have also surpassed LOVEFiLM, which has been operating in the region since 2004, in every streaming-related metric.

Netflix credits their success in the region to factors, including:

  • The growing appetite of the U.K. population for online entertainment that they can access when and where they please, on their favorite devices;
  • The ubiquity of connected devices, capable of streaming video, throughout British homes;
  • The company’s massive promotional effort; and
  • Their increasing investment in content.


The company now sees BSkyB’s movie services as their biggest competition in the region and is putting up a fierce fight to outbid them for the rights to UK movies.

The current discussions surrounding customer acquisition in the Western Europe evokes curiosity on the progress of the previous expansion efforts in Latin America. Netflix has not been very vocal about the progress of the service in the region and how the service is evolving to tackle the unique challenges that affect the size of the addressable market. These include: lower broadband penetration and quality and high content costs and content piracy. With a growing tab from international expansion, it will be interesting to see if and how the company will overcome these challenge and return to profitability.
 

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