Money Matters - Simplified

Netflix Gearing Up for International Expansion


Making the most of the truly global nature of the World Wide Web, Netflix (Nasdaq: NFLX) is gearing up for international expansion. Adweek is reporting that Netflix is in talks with advertisers and media agencies to map out overseas marketing strategies.


This is huge.

We've already known that Netflix wasn't going to stop with September's launch of a streaming service in Canada -- where it expects to be profitable within a year. As long as it can line up enough country-specific licensing deals, the international push finds Netflix eyeing Asia, Europe, and Latin America. A timetable is what we have never been privy to, but the strategy has to be pretty advanced if Netflix is already in cahoots with overseas agencies.

Is the world ready for Netflix as a "streaming only" service? More than half of Netflix's content is now being delivered digitally for stateside subscribers, but DVDs remain the lifeblood to newer and broader title selection.

It's too early to tell how the recently launched DVD-less domestic service is faring. Netflix also isn't releasing any Canadian subscriber counts.

"We've been hitting and exceeding all of our numbers," CEO Reed Hastings said during his company's third-quarter call, but it's easy to sound optimistic when we're talking about internal targets that can be set intentionally low.

The overseas push will also find Netflix bumping up against countries with tiered broadband pricing, where its unlimited model isn't the free-for-all smorgasbord we have here.

However, there's serious upside in global expansion, and that's something that Netflix may need given bearish concerns over the stock's lofty valuation and its vulnerability to competition closer to home.

Apple (Nasdaq: AAPL) and Amazon.com (Nasdaq: AMZN) have been offering digital rentals and downloads for years. Even Sears Holdings' (Nasdaq: SHLD) K-Mart is offering digital celluloid these days. However, these services all rely on piecemeal flicks. Netflix doesn't have a lot of competition on the unlimited side. Coinstar's (Nasdaq: CSTR) Redbox still hasn't come through with its promised digital offering. The potential competitors may get smarter in 2011, but they all continue to shrink in Netflix's rearview mirror.

By the looks of things, prospective rivals may also start getting their passports ready unless they want to truly fade out of view in the booming unlimited streaming space.

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