The streaming media company is going to face trouble from Time Warner, but it managed to be in 130 countries.
According to reports by Bloomberg, Time Warner’s chief financial officer was wondering over the idea of making complete seasons of shows available for Pay-TV customers on demand. This idea of online streaming services came through when people started to ‘cut the cords’ and moved to on demand subscriptions – all this done to take on Netflix, Inc.
Almost about a year ago, the chief executive officer Reed Hastings had announced his plans on a global expansion. In a thirst to be in almost every country in the world, the company set a timetable for making the service available in over 200 countries by the end of 2016. At the time, it seemed too good to be true but just recently at the Consumer Electronics Show in Las Vegas, the streaming media giant announced that it has officially gone live in over 130 countries; so it is only 70 countries behind from its target.
After the announcement, Netflix stock rose by 9% on Wednesday. Now the service is almost available in all the significant market with one exception, China. In a day’s time (figuratively), the company tripled the number of countries. It is now available in most of the biggest market in the world with broadband subscribers.
Past week, it has been launched in Russia and South Korea, which made the company’s market too big from what it was a week prior to the announcement. With these latest launches, there is a little difference as initially it always had partnerships with a number of local businesses along with the availability of various languages but this time round it will only have the following languages: Korean, Chinese and Arabic.
Additionally, the video streaming media giant has not spent a lot of money in making original content for the specific countries as well. Due to this, the distribution of original movies and shows will be quite limited in these markets. One of the biggest costs it incurs while entering a new market is marketing the service. During the current year, it is planning to spend relatively aggressive in marketing so it is quite evident that the service is bound to see international losses in 2016.
Average international contribution loss was of $75 million each quarter during the first 3 quarters of 2015 and the company predicted that for the 4th quarter, it is expected to see an increase in the international contribution to as much as $117 million. Throughout the year, the losses are highly likely to cross the $100 million mark. Subsequently, with the marketing cost, it will have to incur another cost of improving its service in the latest markets.