Netflix looks to conquer Europe with latest expansion

Netflix’s big red flag flies high in Europe, expects to garner massive subscriber base

By Ryan Waniata August 22, 2014

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Just like Jerry Lewis, Netflix appears to be an instant hit across the Atlantic. As the company reaches into European markets as part of its vast global expansion, analysis from research firm IHS claims bingers from overseas will make up as much as 20 percent of its subscriber base by 2015. And according to the report, that growth rate is only expected to accelerate over the next four years.

Big red has already settled in several European markets, including the UK, Ireland, Denmark, Finland, Norway, Sweden, and the Netherlands. And by the end of the year, the company will have planted its flag in Belgium, France, Luxembourg, Austria, Switzerland, and Germany as well.

“Between the expansion of Netflix and its growing popularity in markets such as the UK, Ireland, Netherlands and Scandinavia, we anticipate that the company will add a total of eight million new subscribers to its European tally by the end of 2018,” said Richard Broughton, director of broadband analysis for IHS. And that’s just on one continent.

Netflix has always looked at a broad horizon for its customer base, expanding into Latin America as far back as 2011. And that push towards untapped markets has made investors very happy. As was reported by the Wall Street Journal in February, the company’s stock has been rising by leaps and bounds, with a 142 percent increase over the previous year. That trend has largely continued, as investors gain confidence thanks to the veritable cash cow of subscribers that await the streaming giant in other foreign markets.

Netflix won’t conquer foreign soil unopposed, however. IHS has seen a huge global push towards online subscription services following the Netflix model in recent years, and the company expects subscription services in general in Western Europe to grow substantially in the near future. Services like Germany’s Sky Deutschland, and France’s CanalPlay have been expecting the push from Netflix for a long time, and both have dug in roots as familiar services in their respective homelands.

But, like any super power, Netflix is using its muscle to hit the ground running as it crosses the pond. In order to divide and conquer, Netflix has spent a barrel of money to establish itself as a big part of the growing number of European viewers who are increasingly turning to streaming services. The company recently took on $400 million in debt, in part to cover the costs of its European expansion, and is expected to take on as much as $80 million in extra costs as it spreads its wings. But the gamble appears to be paying off.

Streaming services globally are expected to grow by a rate of around 18 percent a year over the next 5 years, and thanks in large part to Netflix’s expansion, that growth rate is expected to be double in Western Europe, at around 35 percent. Not too shabby for a company that was simply hocking DVDs by mail Stateside just a few years back.