Netflix Inc. is in the news again this morning as the firm gave an update about its global expansion plans. Bloomberg reports that Netflix posted a statement about its plans to enter Hong Kong, Taiwan, Singapore and South Korea early in 2016. The move is in line with Netflix’s previous push to unlock growth in international markets while it continues to dominate the streaming market in the U.S. Analysts are positive that Netflix’s plan to pursue growth in the global market even before the U.S. markets starts to mature will pay huge dividends in the long term.
Netflix’s entry into Hong Kong, Taiwan, Singapore and South Korea will have the firm launching its service with a mix of movies, TV shows, and kid-friendly programming. It plans to debut the local subtitles of many of the content has are popular in the west, but plans to start making licensed and original local contents are underway. More so, details about pricing will be released when the time for the official launch in near.
Global expansion is the key to Netflix survival
Netflix is the biggest video streaming service in the U.S. A report released by Neilsen in 2013 shows that Netflix controls 38% of the U.S. streaming market, Hulu controls 18% of the market, and Amazon Instant Video holds 13% of the market. Netflix’s market lead in the streaming space has given its stock the wings to fly. For instance, the stock has gained almost 95% in the year-to-date as it holds a 52-week trading low of $45.08 and a 52-Week trading high of $129.29. In fact, the stock has been named as the top performer in the S&P 500 this year.
However, the stock has had a rough patch in recent times as increased competition threatens its market lead. In recent times, there has been increased competition for streaming dollars in the U.S. as rivals such as Hulu and Amazon start to match Netflix in the quality of their services. More so, Apple is reportedly planning to enter the streaming space as it launches a new Apple TV today.
Netflix however, is responding to the scramble for U.S. markets by blazing new frontiers in international markets. In June, Netflix started pushing into Latin America with deals for Spanish contents. The firm is beating local rivals in Australia, its service has a warm reception in the UK and the firm has even raised HD costs in the UK.
Asia is key to Netflix growth
Asia is key for Netflix because it provides an untapped fertile ground for growth. Many countries in Asia already have the broadband infrastructure that supports video streaming. In addition, they have growing economies in which people can afford to pay for streaming services.
Netflix is having talks with Chinese online broadcasting companies about entering the Chinese market – but China might be a hard nut to crack. Last week, the firm announced that it has entered Japan. A good point to note is that analysts are have raised their price targets on the stock because of the upside potential in Asia.