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Netflix Launched in Several European Markets in 2015

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Netflix launches in Italy, Spain, and Portugal

In 2015, Netflix (NFLX) launched in a number of Southern Europe countries such as Italy (EWI), Spain (EWP), and Portugal. Netflix has proved to be extremely popular in these countries.

Netflix’s 3Q15 results for its international streaming segment showed revenues of $0.5 billion, up by 49.4% from 3Q14. Netflix’s international segment’s operating losses continued to rise, with losses of $68 million in 3Q15, more than double its losses of $31 million in 3Q14.

Netflix had ~26 million total international memberships in 3Q15. Its total international net additions of 2.7 million subscribers exceeded its internal forecast of 2.4 million for the quarter.

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According to a 2014 IHS (IHS) Technology Report and as the chart above indicates, Netflix is expected to add 8 million European subscribers by the end of 2018. The report added that the growth in the Western European SVOD (subscription video on demand) market is expected to see an annual average growth rate of 35% from 2014–2018, mainly propelled by Netflix.

Reason for Netflix’s popularity in Europe

The main reason for Netflix’s popularity in European countries like Spain and Italy has been a mix of the company’s original English language programming and local content. Netflix is currently producing an Italian series called Suburra. Netflix’s English language original shows like Narcos and Daredevil are also proving to be extremely popular in European territories.

Another reason could also be the pricing of Netflix’s streaming plans in Europe. In international markets, Netflix tries to keep the pricing of its various streaming plans priced between $6–$19 per month.

This strategy has also helped Netflix to compete against its peers such as Amazon’s Prime Instant Video service (AMZN) in countries like Germany.

Netflix makes up 0.92% of the PowerShares QQQ Trust Series 1 ETF (QQQ). QQQ also holds 4.41% of Facebook (FB). For an investor interested in exposure to the Television & Radio sector, QQQ has an exposure of 4.37% to the sector.

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