Netflix, Inc. (NASDAQ:NFLX) may be planning to bring its service to Australia ahead of schedule, partially because at least 20,000 Australians are already subscribed using IP-masking tools to get around the company’ geographic restrictions, Digital TV Europe reports. Netflix hasn’t confirmed the report, which first showed up in local newspaper The Australian, and has previously said that it’s not ready to launch in Australia because of concerns about internet penetration and its ability to offer a competitive price.
Netflix dominant in Europe
Netflix, Inc. (NASDAQ:NFLX) has had a strong push into Europe, as evidenced by completely outpacing HBO in Sweden, a market both companies entered in the last year. Netflix has gone from strength to strength throughout the year, with critically acclaimed original content, investments into ultra-high definition TV, and a rising share price. It already has plans to continue releasing original content to keep people interested, but if it wants to keep expanding it will need to start moving into other markets sooner or later, and knowing that there is already a base of customers who want to subscribe is surely an incentive to move Australia ahead in the lineup.
Expanding could lead to profitability decline
The main issue for Netflix, Inc. (NASDAQ:NFLX) is that if it expands too rapidly it could see its profitability decline for a couple of quarters, according to Bill Maurer for Seeking Alpha. As long as investors are given some prior notice and believe that the expansion will benefit the company in the long term they share price shouldn’t fall too much, but there is a limit to how much profit can be given up for long-term gain before people start to wonder if the expansion is turning into overreach.
This is why having a number of people ready to sign up right away would be so enticing for Netflix, Inc. (NASDAQ:NFLX). Whichever countries it moves into first, investors will want to see a quick bump in subscription numbers to be reassured that the overhead will be paid back quickly. Having 20,000 people turning to fairly sophisticated tools to get their Netflix fix means there are probably a lot more people with less computer savvy who will sign up for the service as soon as it does become available.