Netflix Has Big Plans for Expansion Before the End of 2015
Netflix confirmed big plans for expansion in the near future, propelling the company’s share prices to a record high on Tuesday.
The company confirmed that it will launch in Japan on September 2, its first foray into the Asian market.
The company is also set to launch in Spain, Italy, Iceland, and Portugal before the year’s end, and has its sights set on China for sometime next year.
Netflix wants to be in 200 countries by the end of 2016. It added Australia, Cuba, and New Zealand to the growing list earlier this year.
“It’s going to be a very exciting couple years,” CEO Reed Hastings told the Associated Press.
Netflix is still adding new subscribers in the United States–almost 1 million in the last quarter alone–and stands at almost 66 million subscribers worldwide.
Michael Morris from Guggenheim Partners says the company is on a great course, and recommends buying the stock before it rises even more.
“This is a company that expects to have its global footprint completely rolled out next year. It’s in less than 5 percent of broadband homes outside of the U.S. right now and that broadband market is currently four times bigger than the U.S. market and will continue to grow at a higher rate,” Morris told CNBC.
“I just see a big runway.”
One of the main reasons Guggenheim recommended to buy, other than the international expansion, is the continued ramping up of investment in original programming. The company has scored multiple hits such as House of Cards, and keeps pushing the envelope with shows like Marco Polo, Sense8, and the upcoming Narcos.
“This company’s still in the very early stages of a great virtuous cycle where… they’ve really started to build the content advantage… they are using that funding to develop some of the most innovative, original and demanding content out there,” Morris said.
Not everyone’s convinced, though, that the company can make the leap from 50 countries to 200 in just a few years.
“When you go to launch an over-the-top network globally, it’s not that simple,” Howard Bass, EY’s global media and entertainment advisory leader, told Variety.
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“You can have a framework to scale globally, but you need an understanding of each local market. You need to be learning all the time.”
Reaching the 200 country goal would put Netflix in nearly every country on the globe (240 according to the CIA’s World Factbook).
While Netflix is investing heavily in original programming amid expansion, the company is also looking to snag worldwide distribution rights for a number of other shows. Successful deals so far include pacts with Sony Pictures Television for Better Call Saul and Warner Television for Gotham.
“It might be that there are some cultural barriers to U.S. content as we get into more exotic markets,” chief content officer Ted Sarandos said on a call with investors earlier this year. “But my guess is that we’re going to continue to see our original programming travel and carry the Netflix brand around the world.”