 EUROPE | STREAMING |
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| Netflix to Step into Scandinavia |
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After much analysis, the streaming company chose a digitally educated and sophisticated market to continue with its international rollout. Will this highly competitive territory prove to be a better option than slow-paced Latin America?
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15/08/2012 |
Following international launches made in Latin America (September 2011) and in Europe through the UK and Ireland (January 2012), Netflix has confirmed today it will enter the Scandinavian market by the end of 2012, covering Norway, Sweden, Finland and Denmark. Though not surprising, the announcement brings about very different challenges than the ones the company is facing in the large Latin American territory.
From the point of view of international strategy, the movement is opposite to the one made in September 2011. Whereas in LatAm Netflix "remains focused on accelerating growth by overcoming some of the many unique challenges in the region," such as low device penetration, under-developed Internet infrastructure and consumer payment challenges for e-commerce, Scandinavian users are naturally early-adopters and head innovation in media consumption habits.
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However, while this fact makes the region an appealing territory for Netflix, the company will probably start far from subscriber's top of mind. Local VOD service Voddler, as well as international companies such as Amazon's Lovefilm and MUBI are set to be fierce competitors for the new player.
On top of that, there's the economic pressure. Netflix's stock market performance has been recently described as being under "profitability risks", given the fragile balance between domestic market's weak stability and "uncertain" international ventures. In fact, after Q2 results were announced – with Scandinavia still not confirmed, the company said it expected to see loss in the final quarter of the year when it launched its service in "another European market," a statement that caused a 14% stock drop.
High broadband and SmarTVs penetration, tech-savvy consumers, some of Europe's dominant territories on media growth await for Netflix on the one hand. On the other hand, well stablished competitors, diverse coexisting business models (ad-based free services, subscription models, co-ventures). Will our American friend succeed in becoming the video Spotify?
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