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Netflix announces it will temporarily stop its expansion into international market
This month, Netflix just released its 4th quarter revenue earnings report and it exceeded all expectations. At the same time last year, the company made $876 million but this time the revenue went up to $945 million. The news got the investors very excited and Netflix saw it shares rising up 30%. Part of this increase in revenue is due to the fact that the company has spent the past year expanding its market to Europe and South America. But now the group has decided to put a stop over the expansion.
Netflix sent a letter to its shareholders letting them know that for the first half of 2013 it will not be launching any expansion. The company’s international subscriber base grew from 4.3 millions to 6.1 million between the third and fourth quarter of 2012. For now Netflix has explained that it intends to evaluate the different markets available but has not made a decision yet and the expansion may begin later this year or the beginning of 2014.
The streaming content giant confirmed that there is a real market in Europe that they started tapping into and the initial launch was very successful. They also made it clear that the next target was Latin America. Netflix has made deals with several banks in Brazil that are going to make subscription payment methods much easier for the citizens. It also went on to Mexico where it made it easier for debit card to be used for payment.
The number of households in Latin America that has subscribed for high speed internet has grown to 50 million and that is more that half the U.S households having broadband connection. Netflix sees it as a huge potential market. The company also added that “The Hunger Games” continues to be a hit in Canada and starting its debut in Latin America.
That said Netflix is not the only movie streaming company in town and the competition is also trying its best to get a share of the market. Netflix is having a difficult time having to deal with TV licenses, piracy, local broadcaster and other streaming video companies like Amazon LOVEFiLM, Viaplay and others. For now Netflix claims to be ahead of the rest but nobody really knows for sure. At least with 6 million newly acquired users from the international market it has more weight when it comes to securing right to exclusive content. As it expands in the new market it will also gain more negotiating power.
Netflix currently has more than 23.6 million users when the U.S. And Canadian subscribers are put together. It is still recognized as the world leading Internet movie streaming giant. For a fee of $7.99, users can watch unlimited movies and TV series right on their computer. With the competition coming in, the company will have to come up with new innovative ideas to stay ahead in the game. Probably for the first half of this new year it is going to properly study the market and come up with some new strategies just for that.