Netflix Global Growth Faces New Threats

January 19
7:02 AM 2016

Netflix and its global ambition face a new threat. Video streaming providers around the world are starting an alliance to oppose its international expansion.

According to Nasdaq, it all began when Netflix Inc. won rights to premiere gothic TV drama "Penny Dreadful" in several European countries. In October 2014, CBS TV gave Netflix exclusive right in a multi-territory licensing deal for CBS and Showtime series in European markets: Germany, Austria, Switzerland, France, Belgium, Luxembourg, and Netherlands.

Resentment arose and shortly after the deal, senior executives at Canal Plus, a leading French pay-television group started an initiative. Canal Plus set up a meeting with rival operator, Sky PLC to discuss jointly bidding for TV shows. Both are determined to block Netflix expansion.

However Netflix continued its international aggressive expansion, and this year Netflix has prepared a $6 billion budget in cash to enlarge its original content. USA Today reported that Chief Content Officer, Ted Sarandos plans 600 hours of original series this year. That includex 31 shows aimed at adults and 20 children program.

Netflix has boasted to reach 70 million subscribers in over 190 countries. That will make its service to be available in every corner of the globe. except for China, Syria and North Korea.

The Los Gatos-based company started its international service for video streaming in 2010, to enable subscription from global viewers. Previously Netflix began as a DVD sales and rental delivery service to serve U.S. market. Its streaming service only began in 2007 which accelerated its growth.

As its streaming business became bigger, Netflix shifted its focus. In 2011, the company restructured its DVD sales and rental delivery service to focus on video streaming service. In the same year, Netflix also started to develop its own original program, with the renowed "House of Cards" political drama as one of its first TV series.

Netflix has become the respected force in entertainment industry.  Los Angeles Times even dubbed the company as the most feared force in Hollywood.

Its aggressive expansion strategy has made local players in global video streaming service restless. Following Canal Plus and Sky Plc, other operators including Canada's Bell Media and Shomi, Nordics' Viaplay, Australia's Foxtel and Stan, as well as New Zealands's Lightbox have started to hold conversation to hinder further expansion. Nasdaq also reported Southeast Asian iflix and HOOQ will join the conversation.

On the other hand, Netflix seems to disregard that as a threat, and underestimate the local players in global market. Netflix CEO Netflix Reed Hastings said in a recent interview, "We've gotten enormous support from content owners for one reason—we're outbidding local players."

As of today, Netflix still has the upper hand in the video streaming market. However, as local players in North America, Europe, Asia and Australia started to prevent its further expansion, that will pose a substantial threat for Netflix.

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