Netflix, Inc. (NFLX)’s Quest For Europe Won’t Be Easy

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Netflix, Inc. (NFLX)’s Quest For Europe Won’t Be Easy
NFLX Photo by Matt Perreault

Netflix, Inc. (NASDAQ:NFLX) has garnered immense popularity in the United States and is now planning to expand in Europe. The online video streaming company recently announced plans to expand into six new geographies including France and Germany. That said, the company will have to face significant issues in every European country where it plans to expand. Issues like the substantial competition from domestic players along with pay-TV companies already streaming some of the shows that are shown on Netflix will make the job even tougher for the company, says a report from NY Times.

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Competition from big, small domestic players

France will pose a major hurdle for Netflix, Inc. (NASDAQ:NFLX), where the service provider will not be able to offer the original content House of Cards to the subscribers. French player Canal Plus already has the French rights to stream this series. Also, according to French laws, online release of the film is prohibited within three years of the movie release.

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In Britain, the company must deal with headwinds from satellite company Sky. In France, Canal Plus is the leader. In Germany, Deutsche Telekom’s on-demand TV rules the roost. Apart from these giant players, Netflix, Inc. (NASDAQ:NFLX) has considerable worries about smaller rivals as well.

Sky Deutschland, which is a satellite television operator in Germany, already offers on- demand video services for which it has entered into a deal for Games of Thrones. France may prove even more difficult because there are a number of pay-TV companies who offer a lot of content to viewers.

Older content to give Netflix an edge

However, given the growth rate is slowing down in the United States, Netflix is left with limited options, one of which is penetration in Europe. Netflix, Inc. (NASDAQ:NFLX) already enjoys a good user base in Britain, Scandinavia and Netherlands with a subscription service through cable or Internet broadband charging $10 per month.

According to analysts, Netflix, Inc. (NASDAQ:NFLX) is more inclined towards older content compared to the latest releases, which will gain the company an edge over European counterparts, who have invested significantly in new movies and television shows. Analysts see the streaming service provider as a living archive with TV shows like Buffy the Vampire Slayer from the 1990s or movies like Back to the Future from 1985.

On the pricing front, Netflix, Inc. (NASDAQ:NFLX) has kept its structure similar to that of Amazon Prime at $11 per month. Sky Deutschland charges its subscribers around $13.50 per month and Canal Plus offers its service for more or less same price.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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