Netflix expands into 130 more countries in surprise move

January 7, 2016 4:11 am

 Netflix
Inc. began the year with more than 70 million subscribers and
management had already vowed to spend about $5 billion this year
licensing video from studios around the world. Photo / Bloomberg

Netflix has already crossed off the biggest item on its New Year’s list of resolutions.
The Internet video service debuted in 130 countries Wednesday in a surprise move likely to reel in millions of new subscribers.
CEO
Reed Hastings revealed the scope of Netflix’s expansion at the end of a
presentation in Las Vegas at CES, one of the technology industry’s
marquee events.
“You are witnessing the birth of a global TV network,” Hastings crowed on stage.

The caught almost everyone off guard because Netflix had
previously set a goal of being available in most of the world by the end
of this year. It looked like the Los Gatos, California, company had
plenty of work ahead it because it ended December in 60 countries.
Now,
Netflix is available in 21 different languages and streaming in just
about every market that it had in its sights, with the notable exception
of China, the world’s most populous country.
Entering China may
be a formidable challenge requiring potentially prickly negotiations
with a government that blocks its citizenry from seeing material it
considers objectionable or incendiary.
Netflix currently has no
plans to push into North Korea, Syria or Crimea because of restrictions
on U.S. companies operating in those countries.
Investors were
delighted with Netflix’s quantum leap across the globe. Its stock
climbed $8.78, or 8 percent, $116.44 on a grim day in the rest of the
market.
The uptick in the shares reflects a belief that Netflix
is now in a position to sign up more subscribers this year than analysts
had previously anticipated, generating additional revenue that the
company can spend on TV series and movies as it bids against rivals such
as HBO, Amazon.com, YouTube and Hulu for licensing rights.
Netflix
Inc. began the year with more than 70 million subscribers and
management had already vowed to spend about $5 billion this year
licensing video from studios around the world.
Increasingly,
Netflix has been buying material that only can be seen on its service,
with more than 600 hours of original programming lined up for this year.
That slate encompasses more than 50 exclusive TV shows and movies,
including award-winning series such as “House of Cards” and “Orange Is
the New Black.”
Although Netflix is now virtually worldwide, not
of all its will be available everywhere. For instance, a
prized licensing contract that gives Netflix the rights to Walt Disney
films after their theatrical release will be limited to the U.S. and
Canada as part of a deal negotiated several years ago. Hastings told
reporters Wednesday that Netflix is hoping to expand those rights into
other countries.
Netflix has come up with a formula that has
proven addictive as its service has transformed the entertainment
industry by allowing people to watch video anytime they want on an
Internet-connected device.
Hastings revealed Wednesday that
Netflix subscribers watched 42.5 billion hours of programming last year,
including 12 billion hours in the October-December fourth quarter. The
fourth-quarter viewership volume represented a nearly 50 percent
increase from 8.25 billion hours the previous year. Put another way,
Netflix subscribers are now watching a weekly average of 13 hours of
programming, up from 12 hours the previous year.
In remarks to
reporters, Hastings likened the near-completion of Netflix’s worldwide
expansion to a parent having a baby. “It’s a big deal, but the real work
is the next 20 years,” Hastings, 55, said.
One of Netflix’s next
challenges will be delivering on its promise to make its international
operations profitable by next year. Hastings said the company is on
track to fulfill that pledge.

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