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Europe Helps Drive Netflix Subscriptions Worldwide

EU-5 residents will be key to regional growth

July 10, 2015

Netflix, the subscription video-on-demand service headquartered in the US, has been a player in Western Europe since 2012, when it began operations in the region’s English-speaking markets (the UK and Ireland), in addition to the Netherlands and the Nordic countries. In late 2014, the firm extended its European footprint with launches in France, Germany and four other nations. By now, it is also active in key Latin America and Asia-Pacific markets, including Australia, New Zealand and Japan.

Paid Netflix Subscribers Worldwide, by Region and Subscription Type, Q2 2013-Q1 2015 (millions)

Since then, industry observers have been keen to know how the firm’s global plan is progressing. Its US base included 40.3 million streaming subscribers—as well as nearly 5.5 million DVD subscribers—in Q1 2015, according to Netflix, but it has faced solid opposition in some of its other target markets, making the future uncertain.

Paid Netflix Subscribers in Select Countries/Regions, Dec 2011-Dec 2015 (thousands)

Judging by the “Global OTT TV & Video Forecasts” report from Digital TV Research Ltd., growth is pretty steady: By year-end, Netflix was expected to have an estimated 69.9 million subscribers around the world, compared with 54.5 million at the end of 2014—a projected gain of 28%. The US home market was forecast to account for about two-thirds—some 43.5 million—of all streaming subscriptions in December 2015.

International subscriptions were expected to near 26.4 million during the same period. This total may look small compared with the US tally, but it would represent a year-over-year leap of 57%.

Europe should play a major role in this expansion, the forecast suggested. The UK was expected to be home to the largest Netflix viewership outside the US, with over 4.9 million subscribers. Sweden and the Netherlands were projected to have nearly 1.5 and 1.6 million, respectively, by the end of 2015, while France and Germany should each contribute about 1.2 million.

UK Digital Video Viewers and Penetration, 2013-2019

It’s easy to see why the UK can be profitable for Netflix. More than 38 million residents will watch digital video content at least once per month in 2015, eMarketer estimates—equivalent to about three-quarters of all UK internet users and nearly 59% of the entire population. And over 1 million new viewers will join the digital video party each year between now and 2018.

Digital TV Research forecast that Italy and Spain would have much smaller Netflix audiences, estimated at 150,000 each—but that’s not surprising, given the language difference and the fact that many residents of both countries are still feeling the lingering effects of the global recession. Paid video subscriptions may not be a priority for these financially squeezed consumers.

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