Netflix has gone global, according to an announcement made today by the company’s co-founder and CEO Reed Hastings during his keynote speech at CES 2016 in Las Vegas.
It’s an impressive statement, but what does it mean?
Yesterday, Netflix was available in 60 countries. Today, it went live in an additional 130 countries, including India, Russia and South Korea. While its programming is largely available in English in most of those new territories, today it added Arabic, Korean, and simplified and traditional Chinese to the 17 languages it already supports.
Netflix launched its streaming service in the U.S. in 2007. In the ensuing years, it expanded globally, first to Canada , then to Latin America, Europe, Australia, New Zealand and Japan.
Netflix is still not available in China, although the company hopes to launch there by the end of the year. But, barring any dramatic diplomatic breakthroughs, it won’t be available in Crimea, North Korea and Syria any time soon due to U.S. government restrictions on American companies doing business in those countries.
“Today, you are witnessing the birth of a new global Internet TV network,” said Hastings. “With this launch, consumers around the world — from Singapore to St. Petersburg, from San Francisco to Sao Paulo — will be able to enjoy TV shows and movies simultaneously — no more waiting.”
In a separate presentation today at the Citi 26th Annual Global Internet, Media and Telecommunications Conference at the Bellagio in Las Vegas, Netflix chief financial officer David Wells said that Netflix was addressing half of the world’s broadband household by the end of 2015 and, with the 130 countries added today, it now addresses another quarter of those households.
Netflix is also growing its content slate. Wells said the service will have 600-plus hours of original content in 2026 from its various original films and 31 new and returning series.
The price of expansion has had an impact on Netflix’s bottom line, leading it to project a $117 million operating loss in Q4 2015. Wells said its projected loss for Q1 2016 will be $120 million, and losses for subsequent quarters in 2016 should be about the same, “give or take 10–20 million.”
Wells said that one of the biggest challenges of Netflix’s global expansion has been securing the rights for individual pieces content across a multitude of territories.
“It’s a lot easier when you have a global right than when you’re talking about having a content management system that has 45 different variants,” Wells said. “The studios have done a good job of monetizing that content and evolving over the last 20 to 25 years, selling it market by market.”
As result, some of Netflix “global” rights deals are single contracts, while others are “cobbled together from a set of rights,” Wells said. “From a content seller perspective, the fear you always have is, ‘Am I getting a good deal? I’d feel more comfortable if I had four buyers for this and I pick the highest.’ And so we have to make them feel comfortable that they’re getting fair compensation for their content, as well. So, in some cases, we’re paying a pioneer tax on that.”
Netflix’s most recent expansion also came with technical challenges, not the least of which was dealing for the first time with languages that read right to left.
“I’m sure our engineers would crush me if I trivialized how hard that is to do,” said Wells.
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