3Vision Insight - Netflix
25 Jun 2015
More than 100 million fixed broadband households in Europe can now legitimately subscribe to Netflix since their launch in France and Germany.
Q1 2015 results stated that Netflix now have over 19 million international subs, up from 16.8 million in the previous quarter, and we estimate that Europe accounts for almost 9 million of those.
There remains approximately 100 million broadband homes unserved by Netflix, with five European territories in the top ten for fixed broadband subscriber numbers yet to be launched - Russia, Poland, Italy, Spain and Turkey.
These would all present significant challenges for Netflix, for many reasons, but every indication is that Italy, Spain and Portugal will launch in Q4 2015, which has recently been confirmed officially. Poland seems to be planned for 2016 possibly as part of a pan-CEE service.
Netflix has stated they will be in 200 countries by 2017 so comprehensive European coverage is bound to happen sooner than many would have expected.
Netflix appear to be increasingly focused on distribution partners as they role out to new markets, with the more recent launches involving partners from launch.
Vodafone have worked closely with Netflix, offering six months free subscription to Netflix with specific mobile packs in most markets (including UK, Netherlands and Germany).
Virgin Media (UK) and ComHem (Sweden) continue to offer Netflix through their TiVo set-top-boxes, and more Pay TV relationships are launching. TalkTalk and BT TV (both UK) now include Netflix and new markets are coming on with partners.
Quad-play operator Bouygues (France) allowed mobile customers access to Netflix from launch via their 4G and 4G+ network, and are integrating the service with all of their TV set-top-boxes. In addition in France Orange have agreed to distribute Netflix via its Pay TV set-top-box.
Belgian Quad-play operator Belgacom are also bringing Netflix to their Proximus Pay TV service, adding challenges for their local cable competitor Telenet who have launched their own competitive SVOD services.
Deutsche Telekom have added Netflix to their Entertain IPTV service alongside local SVOD player Maxdome.
The US Netflix service has nearly 40,000 assets. In Europe the UK service is the largest with around 13,000 assets.
We believe international services will not reach the same total volume levels as the US - in part because the scale of the markets do not justify this. More importantly however Netflix’s content strategy has developed to focus more on exclusive, higher quality content and original productions rather than non-exclusive “tonnage” that characterised the early days of the American service.
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