International expansion of Netflix

Netflix is a video on demand service which began expanding its business starting in 2010. The platform started in the United States and expanded for the first time in 2010, to Canada.  This marked the beginning of a long expansion process. By 2015, Netflix was operating in 50 countries. Today, Netflix is in over 190 countries, and has drastically increased their rate of expansion in the last five years. As of 2020, there were 203.67 million people paying for a Netflix subscription. Of those people, over 73 million are located in the United States.

Expansion timeline

In 2010, Netflix entered the international market by expanding into Canada. In 2011, Netflix began to expand more. From September 5 to September 12, 2011, Netflix began rolling out its services to over 40 countries in the Latin America and Caribbean regions. Netflix began its expansion into Europe in 2012.  By the end of that year, Netflix was streaming in the United Kingdom, Ireland, Denmark, Finland, Norway, and Sweden. In 2013, Netflix launched in the Netherlands, and in 2014 Netflix continued its expansion further into Europe. Expansion to Australia and New Zealand occurred in March 2015. On February 4, 2015, expansion to Japan was announced to begin during the fall of 2015. On January 6, 2016 at Consumer Electronics Show, Netflix announced a major international expansion into 130 new territories (including most countries in Africa); with this expansion, the company promoted that its service would now be available nearly "worldwide", with the only notable exclusions including Mainland China, and regions subject to U.S. sanctions, such as Crimea, North Korea, Russia and Syria. The company also announced a partnership with LG to market pre-paid services in Asia, Europe, and the Middle East. As of 2022, Netflix is streaming in over 190 countries, not including China, Crimea, North Korea, Russia or Syria.

2010: Canada

Netflix entered the international market when they began offering their streaming service to Canada on September 22, 2010. At the time the subscription costed $7.99 a month, a rate that CEO Reed Hastings called, "the lowest, most aggressive price we've ever had anywhere in the world." However, despite the proclaimed low price, content selection in Canada was extremely limited. Data conducted in 2012 by Josh Loewen for Canadian Business Online found that in the United States there were 10,625 unique titles in Netflix's library, whereas in Canada there were only 2,647. However, there is also content offered exclusively in Canada that is not available in the United States. For example, a short-lived Fox sitcom, ''Running Wilde'' starring Keri Russell and Will Arnett, began streaming on Canadian Netflix the same day it began airing in the United States on network television. The show streamed on Canadian Netflix because there was no Canadian broadcast partner for the series. Regardless of streaming selection, it took the company less than a year to reach one million subscribers, approximately three percent of Canada's population. As of February 2014, there were approximately 5.8 million Canadians using Netflix, or 29% of Canada's English-speaking population. This number represents an increase in Canadian users by approximately 40% since 2012.

2011: Latin America, Central America and Caribbean

On July 5, 2011, Netflix announced its plans to launch its streaming service in Latin America, its largest expansion to date. At the time, Netflix had 23 million subscribers in the US and Canada. Entering the Latin American market meant Netflix had access to approximately 600 million people, or twice the number of people living in the United States. Although high speed internet in Latin America is not as accessible as it in the United States and Canada, upon the announcement of its expansion to Latin America, Netflix stock immediately surged 8%, bringing the company to a record share price of $291.

Beginning in September 2011, the company began its expansion to 43 countries and territories in Latin America and the Caribbean, offering content in English, Spanish, and Portuguese. Brazil became the first country in Latin America to launch the service on September 5. There the service was offered at $BR14.99 or approximately $9.10 per month, making it more expensive than in the United States and Canada. Rounding out the first five countries to launch streaming service in Latin America were Argentina, which followed on the 7th, Chile on the 8th, Colombia on the 9th, and Mexico on the 12th. Service spread to the other 38 countries in the following weeks. Among the content distributed to Latin America was programming from CBS, Miramax, and Showtime.

The launch in Latin America was not as successful as the company had hoped. While in Latin America, Netflix had no streaming competitors as it did in Canada, the digital divide (a lack of high broadband internet penetration) hindered rapid growth. In Brazil, for example, only 20% of the population had an internet speed greater than ; a second are needed to stream Netflix's content. Furthermore, the lack of competitors in some ways slowed growth as well. Whereas in Canada new subscribers had been exposed to streaming content by other companies, the concept was newer to a wide Latin American audience, making some skeptical of the prospect. A banking system unused to recurrent monthly transactions exacerbated the problem. Still, while Latin American expansion happened more slowly than expected, Netflix didn't lose money for the expansion and their Canadian expansion happened at a faster rate than expected, making their first two forays into the international market fairly successful. Additionally, despite the hindrances to growth in Latin America, Netflix continued in pursuit of content expansion, signing a deal with Fox in May 2012 (for a July 15 start) to make its popular content (e.g., '' How I Met Your Mother'', ''Glee, Bones, The X-Files, Wall Street'') available in the region.

The 2011 controversy

The initial launches in Canada and in Latin America happened before Netflix's 2011 controversy in the United States. In September of that year, the company decided to switch to two separate plans and websites, one for streaming and one for DVD, and hiked their prices accordingly. The change to its business model was accompanied by a loss of approximately one million American users and a plunging stock price. Prior to announcing the change to service stock was valued at just around $300. After the price it plunged to less than $53 a share. Prior to this debacle, Netflix had been having its most successful quarter, mainly due to the decision to expand to Latin America. The company quickly lost all the money it made in the quarter it announced growth to Latin America, was forced to apologize, and rethink its changing model.

Bringing people back to Netflix after this came in two forms. First, it began work on producing its own original content – announcing its adaptation of ''House of Cards'' in 2011 for a 2013 air date and its revival of ''Arrested Development'' in 2012 for a 2013 air date. Second, it continued international expansion – the originals were able to travel alongside its international expansion since Netflix, for the most part, retained complete control of their shows' distribution rights.

2012: First European expansion: United Kingdom, Ireland and Scandinavia

Netflix started its expansion to Europe in 2012, launching in the United Kingdom and Ireland on January 4. By October 18 it had expanded to Denmark, Finland, Norway and Sweden.

According to Christof Baron, CEO of the international marketing group Mindshare, Netflix developed a strategy for its international expansion, "They start with a limited offer which doesn't cost them very much money and minimizes the risk. Then they collect very detailed data about what people like, and structure programming and investment around consumer behavior." This accounts for cultural taste differences and allows distribution deals to develop accordingly. By September 2013, Netflix had added token minimal content from Channel 4, ITV and the BBC
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