Netflix global expansion rationale questioned by Enders
Research consultancy Enders Analysis’ latest report is questioning the rationale behind Netflix’s global expansion strategy – based on the “belief that achievement of global scale will improve its bargaining power.”
“The rationale is questionable and the prospects of incremental profits at best long-term.”
Netflix launched in the UK with much fanfare in January 2012, joining Lovefilm and HMV On-Demand amongst others within the highly competitive VOD film market.
Since its launch, Dixons group has launched KnowHow while Sky has opened up its Sky Anytime+ on demand area from being exclusive to Sky Broadband customers to users of any ISP as well as also today announcing its recent purchase of OTT film service Acetrax, further illustrating the competitive nature of the on demand film space.
Enders states: “Netflix resumed strong growth in domestic US streaming subscriptions in Q1 2012, but weak Q2 guidance and high churn reinforce doubts about long-term profit growth in an increasingly competitive market.
“The Netflix UK and Ireland streaming launch in January 2012 exceeded expectations; however, the importance of the US and interlocking of established content creation and TV distribution interests underscore the challenge facing Netflix and the thin-ness of the line between success and failure.”
The full report is available by contacting [email protected].