Oct 23, 2018 - Technology

Global jitters growing over Netflix

An illustration of the Netflix logo on a phone, set against a screen of numbers from the stock market

Photo: Guillaume Payen/SOPA Images/LightRocket via Getty Images

The push to create rivals to stunt the growth of Netflix has become a global phenomenon, as the streamer is now available in 190 countries and is poised to consistently make more money in the future abroad than in the U.S.

Why it matters: The same efforts seen in the U.S. — where broadcasters and telecom companies are teaming together to create Netflix competitors — are happening globally, pointing to the threat of Netflix's dominance abroad.

  • In the U.K., British broadcaster ITV joined BBC and Channel 4 in June in signing a 5-year agreement to invest $165 million to turn a British digital video platform into a Netflix competitor, per The Hollywood Reporter.
  • In Australia, CBS said in August that it's planning to expand its subscription services to rival Netflix in Australia. It purchased Network Ten for a reported $162 million in Australia last year which should bolster that offering. 
  • In France, the country's biggest broadcasters unveiled "Salto" earlier this year, a streaming platform that combines programming muscle from French broadcasters France Televisions, TF1 and M6, per Deadline.

By the numbers: Netflix stock was up roughly 15% in after-hours trading Tuesday after the streaming giant announced it beat investor expectationson earnings, revenue and user growth.

  • The company added 5.87 million international subscribers compared with the 4.46 million expected, according to FactSet.
  • At this point, the company has over 73 million international subscribers and it expects to hit nearly 80 million by the end of the year.

Between the lines: The company is pouring billions of dollars into localized content and has been pushing to form marketing partnerships with local telecom companies to widen its distribution.

  • Chief content officer Ted Sarandos said last week, "So as long as we focus on the quality of production, those (local) shows can be worked to drive local subscribers in (a) country, but also drive global viewing when we do it right."

Yes, but: The company faces challenges in some key markets.

  • In India, the company acknowledges that it faces fierce competition from Hotstar, which is owned by 21st Century Fox. Netflix CEO Reed Hastings says it's expanding beyond English into Hindi, and is looking at more pricing and bundling options there.
  • In Brazil, a #DeleteNetflix campaign erupted earlier this year after former Brazilian President Dilma Rousseff and other political figures accused the streamer of political bias and character assassination.
  • In China, where internet video consumption is outpacing traditional TV, Netflix is not available. There, iQiyi, owned by Chinese tech giant Baidu, is dominant, but is still much smaller than Netflix.

What's next: Netflix said earlier this month that productions have increased nearly 5x in Latin America since local shows began filming in the region in 2015 and has more than 70 titles being filmed across Latin America.

  • Producers of Latin American content are gearing up for a production demand from streamers entering those markets.
  • Latin American SVOD (subscription video on-demand) subscribers are expected to double by 2023, according to Simon Murray, principal analyst and owner of Digital TV Research.
Go deeper