It’s no secret that Netflix is incredibly popular in the United States. Whether you’re looking to spend your Saturday night in with a movie or binge-watch your favorite show, Netflix is a cheap and easy way for doing so. Everyone seems to have, or share, a Netflix account so it’s little wonder the company turns a pretty hefty profit each year. According to Reuters, Netflix posted a $201 million profit for U.S. streaming revenue in the first quarter of 2014.
With the amount of success Netflix has experienced in the U.S., it only makes sense that the company is looking for more opportunities abroad. Since it began its online streaming services in 2007, Netflix has spread to more than 40 countries. Netflix isn’t available everywhere, but instant stream is becoming available in more places every year. In 2012, Netflix came to Europe — people the U.K., Ireland, Norway, Denmark, Sweden and Finland were the first to use Netflix in the continent. The company also launched in the Netherlands in 2013.
Now, Netflix will spread further into Europe. On May 21, 2014, Netflix announced it would soon become available in six more countries — France, Germany, Austria, Switzerland, Belgium and Luxembourg. Here are some details about the company’s planned expansion and the difficulties Netflix may face in the new markets.
Competition From Other Networks
In the United States, Netflix does not have a great deal of competition in the instant-streaming business. Amazon Prime and Hulu Plus also offer instant streaming, but with 35.67 million subscribers Netflix has most of the market share. However, the company faces greater competition abroad. In 2011, Amazon acquired a British streaming company known as LoveFilm, which has since spread to other parts of Europe. Many countries also already have their own on-demand video and television services. Germany has ProsiebenSat1 and Sky Deutschland, while Belgium has an on-demand service through Telenet.
Contract and Legal Restrictions
Besides competition from other streaming services, Netflix will also have to contend with cable networks and legal regulations. Many networks in Europe already have long-standing agreements with shows, meaning Netflix will not be able to include them in the instant steam. Netflix may not even have exclusive rights to all its original shows. House of Cards was so popular that German instant-streaming networks obtained distribution rights before Netflix came to the country.
In addition, some countries have more complex laws about when and how movies can be re-released. In France, for example, a movie cannot be released on an instant-streaming subscription network for three years after its premiere. However, you can rent a physical copy four months after its debut. Being able to stream some new releases is definitely one of the perks of Netflix. The inability to host new movies may make the network a little less attractive in some countries.
Competitive Pricing
To attract new customers, Netflix will price its services as a competitive monthly rate. In many countries, a subscription costs about the equivalent of $10. That’s pretty good, considering the amount you’d pay for Netflix over a year is less than what you’d spend on a single smoke evacuation replacement filter. Germany’s ProSiebenSat1 saw a consistent increase in subscriptions after it lowered its rate to 7.99 euros a month. By offering a similar or slightly lower rate, Netflix could definitely take part of the market share.
Net Neutrality
Europe is a great place for Netflix to expand, as the EU recently agreed to protect net neutrality. In case you haven’t kept up with the debate in the U.S., loss of our net neutrality would allow cable providers to control what kind of content comes through their wires. Some have suggested that companies who use more bandwidth, and therefore put a greater burden on broadband providers, should be charged higher fees for service. This would mean Netflix, which uses more data, would have to pay more money to have its content delivered to users. As this could cost the company a lot of money, it only makes sense that Netflix would want to expand in countries committed to net neutrality.
In spite of the challenges, do you think Netflix’s decision
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