Netflix, Inc. (NASDAQ:NFLX) will expand into New Zealand and Australia in March, giving domestic broadcasters a run for their money as they are already competing with each other for home entertainment viewers. The online video streaming company said it would sell content in the region to stream on televisions, tablets, smartphones, computers and Internet-connected game consoles.
Netflix remains quiet on pricing details
Netflix did not reveal the pricing of the service and did not talk much about the number of potential subscribers. The streaming company is working on its strategy of expanding into new geographies to escalate its international presence. At present, Netflix’s subscriber base totals 50 million. The company’s $8.99 per month fee in the United States is slightly above one-third of what some domestic players charge in the markets where the company plans to expand.
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Australia is a promising market for the company to expand in, as the country’s broadband network connects 93% of its 23 million people with high-speed internet access. Also domestic companies in the region have comparatively lower penetration.
Australia an interesting market
Foxtel, Australia’s largest cable TV channel, slashed its price by half to A$25 per month following reports that the company is struggling to up its 30% market share and speculations surrounding Netflix entering the region. Newspaper publisher Fairfax Media Ltd and broadcaster Nine Entertainment Co Holdings Ltd are working on entering the market before Netflix with A$100 million joint venture streaming service.
“The risk with Netflix is that it can replace existing home media sources like free-to-air or pay TV or things like that,” one cinema analyst told Reuters.
The analyst said that Australian cinema companies such as Village Roadshow and Amalgamated Holdings Ltd. will not see immediate headwinds, as none of Netflix’s shows are new movie releases.
Goldman Sachs analyst Christian Guerra notes that the increasing expansion of over-the-top viewing options in the United States will be repeated in Australia. The other players planning to explore OTT options are Verizon Communications Inc. (NYSE:VZ), DIRECTV (NASDAQ:DTV), Sony Corp (ADR) (NYSE:SNE) (TYO:6758) and now Time Warner Cable Inc (NYSE:TWC), owner of HBO.