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Netflix global expansion behind schedule; how it can catch up

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In January Netflix announced it would be available in every country in the world within 2 years. 6 months on and it has only added 2 countries to the rolls. At that pace it will fall far short of its stated goal. Or will it?

Netflix is now available in 80 countries and protectorates around the world. This year the company added Australia and New Zealand, its first foray into the Asia-Pacific region. Reed Hastings, Netflix CEO, announced in an interview with El Mundo that Netflix would launch in Spain in October. With the entire continents of Africa and Asia yet to receive a single release, at the current release rate it looks like the company will fail to get coverage in the remaining 116 countries by the end of 2016.

There are two primary reasons it is taking so long to release in new countries, and both are content related. The first is the simple fact that it takes a long time and a lot of money to negotiate the license rights in each region in which the company wants to release.

The second reason was confirmed by Joris Evers, Vice President and Head of Communications for Netflix at the Copenhagen Future TV conference. He said that the company sort to strike an 80%/20% balance between mainstream global and local content in the countries it launches in. However, with the clock ticking its clear the company simply can’t negotiate that many local deals in such a short period of time.

The answer? Launch a global player which is accessible everywhere, that everyone can subscribe to. This service would be populated with content for which Netflix has a full global license. The company can continue to launch specific services in more important markets with more content licensed specifically for that region.

The way this should work for consumers is that anyone from any country will be able to sign up for Netflix. If there is a local version available, they will be subscribed to it. If there isn’t, they will receive a subscription to the global version. From a Netflix subscribers point view this will also be simple. The company has stressed in the past that a subscription is global. Today, when a user logs in from a foreign country they automatically get access to the local version (not the version from their home region,) if one is available. If there is not a local Netflix version today, a subscriber is out of luck. However, if the company does deliver a global version they would automatically get access to that.

The truth is that the company already has a global player. It’s the U.S. version of Netflix. Millions of people around the world subscribe to U.S. Netflix and access it through anonymizing VPNs. According to data from Globalwebindex, 54 million people have accessed Netflix through a VPN in the last month. Top locations accessing Netflix through a VPN include China (22M) and India (6M).

Netflix has not said they will deliver a global player. However, it is completely aligned with their stated strategy of negotiating global content licenses. As well, it is hard to see any other way that the company can possibly reach its goal of worldwide availability by the end of 2016.

Why it matters

Netflix claims it will be available in all 196 countries of the world by the end of 2016.

The rate at which the company is launching local versions is too slow for it to meet this goal.

The only way Netflix global expansion will reach all 196 countries in the world is with a global player.


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