As announced earlier,
Netflix Inc (
recently started its service in the Netherlands. The company is
offering its streaming services for a monthly subscription charge
of €7.99. The start of operations in Netherlands is Netflix's
first expansion activity in 2013.
Netflix started its international operations by entering Canada
in 2010 and then expanded to Latin America in 2011 and the U.K.,
Ireland, Finland, Denmark, Sweden and Norway last year.
Netherlands is the 41st country where Netflix will be offering
The Netherlands expansion might prove to be a prudent idea for
Netflix as approximately 80% of households have access to
high-speed Internet, according to records maintained by the
Organization for Economic Cooperation and Development.
Nonetheless, there is no dearth of competition among
video-on-demand service providers in the region. Cable operators
such as UPC, Royal KPN NV's Web-enabled TV service, HBO and Film1
already have their operations in the region.
Although international expansions are the key to Netflix's growth
story, increasing investments are expected to hurt profitability
in the near term. At the same time, it is noteworthy that in the
recently concluded second quarter of 2013, revenues from
international operations soared 155.3% from the year-ago quarter.
We believe that Netflix will continue to pursue expansionary
opportunities in other regions of Europe. However, starting
operations in a new country demands huge investments and
considerably increases marketing and general and administrative
expenses. These are expected to keep margins under pressure
during the investment phase.
Nonetheless, Netflix remains a force to reckon with in the
streaming market. We believe that Netflix's improving content
portfolio and international expansion are noteworthy. We expect
Netflix to witness improved sales as subscribers are taking note
of its diversified portfolio.
Moreover, the recent licensing deals with the likes of
CBS Corp (
, and AMC will provide Netflix a competitive edge over
Currently, Netflix carries a Zacks Rank #3 (Hold).
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