Netflix’s content offering internationally
In international markets, Netflix (NFLX) offers a mix of 80% content in English and the remaining 20% in the local language. However, Netflix has been flexible about this content mix. For example, in Japan (EWJ), where content in the Japanese language is more popular, Netflix has leaned more toward offering content in Japanese.
Netflix stated at the Goldman Sachs Communacopia conference last month that its content has been a key driver of its popularity in international markets. The company further said that with its local content, the company isn’t trying to compete with local pay-TV operators but is trying to offer its international viewers more viewing choices.
The company also said that when it comes to local content, it’s looking at content that can have a global appeal such as its original show Narcos. Netflix also wants to continue growing its content library in the United States and wants to focus on content that it can monetize globally.
Netflix is experimenting with licensing its content to linear television networks in international markets. The company believes that from a content licensing perspective, its original content provides an attractive opportunity. As a result, it says that it is “licensing first window for some titles in some countries, and second window for global.”
According to the company, “What we’re finding is when we launch in our new original series, there’s a huge appetite for them around the world.”
Netflix also stated at the Communacopia conference that the company was on track to earn 50% of its revenues from international territories.
Rise in streaming content obligation
The emphasis on original content has also meant a rise in streaming content obligations. Streaming content obligations are the costs that Netflix pays for licensing, acquiring, and producing content. Netflix (NFLX) had streaming content obligations of $13.2 billion at the end of fiscal 2Q16, a rise of 31.0% year-over-year, as you can see in the above graph.