International expansion seems to be the newest mantra for subscription streaming services to adopt if growth is to be achieved in the near future. Having recognized this fact, Netflix Inc (NASDAQ:NFLX) has made known its intention of crossing the proverbial ‘fish-pond’ and extend its tentacles in mainland Europe, particularly countries like France, Austria, Belgium, Germany and so on. While it maintains a strong presence in Canada, UK, Netherlands and Nordic countries ever since it made its first attempt at expansion in 2010, now in 2014, the company is ready to explore hitherto unchartered territory in a bid to improve revenue figures.
However, implications from this move are likely to manifest the most in form of growing costs, most of which are likely to be incurred for acquiring and localizing content. True though it is that people in European countries love American shows, they are equally protective of their ethnic culture and heritage, meaning localization would play an important role in gaining acceptance.
To its credit, Netflix Inc (NASDAQ:NFLX) seems to be aware of the challenges involved from the manner in which they have handled their French impregnation. While its reception in France might have been hostility personified, the company has done well to adopt a pacifying stance and quell fears of an impending cultural invasion from the New World.
Prominent in Netflix Inc (NASDAQ:NFLX)’s strategy to woo the European market is shifting of its head-quarters to Amsterdam, expansion of office and hiring new people at senior levels who would be willing to operate out of Europe for at least a year. As explained by a Netflix Inc (NASDAQ:NFLX) spokesperson –
“Every market around the globe has its nuances. Our challenge is becoming a great global company where we really understand the nuances of each market and do a great job for consumers around the world.”
All of this is aimed towards staying ahead of competition namely HBO and Amazon and distributing eggs in various parts of the world rather than remaining concentrated in USA only. The only hurdle that is likely to arise might be that of cultural difference as is aptly expressed in this comment By Richard Broughton of IHS
“Europe is an attractive market for a subscription service. People are willing to pay for TV subscriptions and are more willing to pay for media in general. [But] it is quite difficult for new entrants to compete.”
This article has been written by Vinita Basu.