Netflix (NFLX) Expansion in Europe May Be Biggest Challenge Yet
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Netflix (Nasdaq: NFLX) is looking to embark on a broader expansion across Europe in an effort to bolster is sparse presence in the market.
The WSJ said Wednesday that Netflix is in discussion with U.S. entertainment companies about licensing agreements for European markets like France, Germany, and others. The company is also in talks with France about a possible launch before the end of this year.
Content and media providers aren't taking the potential onslaught sitting down; a slew of companies have looked to secure subscribers with unlimited streaming bundles starting at around €10 per month. Included in the defense tactics are companies like Germany's Sky Deutschland, France's Canal Plus (of Vivendi), and Italy's Mediaset.
Europe is a key market for Netflix; according to the latest market data, Western Europe had 134 million broadband homes through the end of 2013, versus 88 million in the U.S. One analyst thinks streaming-video revenue in W. Europe will grow faster than anywhere else over the next few years, to a potential $1.1 billion through 2017.
Investors are banking on positive results for Netflix in Europe as well. Shares gained 142 percent over the last 12 months to around $400 on expectations of an improved subscriber base in the market. Currently, Netflix operates in 41 markets, but just the U.K., Nordic region, and the Netherlands in Europe.
For France, there is a restriction on streaming-services, like Netflix, which restrict the companies from streaming films until three-years after they are released in the theater. In addition, video services are generally required to finance film production in the market.
While other markets might be less restrictive, there are still licensing hurdles and distribution requirements that Netflix will need to contend with in order to provide and attractive enough service to lure in more subscribers.
Shares of Netflix are down 0.8 percent.
The WSJ said Wednesday that Netflix is in discussion with U.S. entertainment companies about licensing agreements for European markets like France, Germany, and others. The company is also in talks with France about a possible launch before the end of this year.
Content and media providers aren't taking the potential onslaught sitting down; a slew of companies have looked to secure subscribers with unlimited streaming bundles starting at around €10 per month. Included in the defense tactics are companies like Germany's Sky Deutschland, France's Canal Plus (of Vivendi), and Italy's Mediaset.
Europe is a key market for Netflix; according to the latest market data, Western Europe had 134 million broadband homes through the end of 2013, versus 88 million in the U.S. One analyst thinks streaming-video revenue in W. Europe will grow faster than anywhere else over the next few years, to a potential $1.1 billion through 2017.
Investors are banking on positive results for Netflix in Europe as well. Shares gained 142 percent over the last 12 months to around $400 on expectations of an improved subscriber base in the market. Currently, Netflix operates in 41 markets, but just the U.K., Nordic region, and the Netherlands in Europe.
For France, there is a restriction on streaming-services, like Netflix, which restrict the companies from streaming films until three-years after they are released in the theater. In addition, video services are generally required to finance film production in the market.
While other markets might be less restrictive, there are still licensing hurdles and distribution requirements that Netflix will need to contend with in order to provide and attractive enough service to lure in more subscribers.
Shares of Netflix are down 0.8 percent.
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