Market Insight

Netflix launches in the Netherlands

September 10, 2013

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Streaming online video service provider Netflix has launched services in the Netherlands, with its subscription package priced at €7.99 per month. Company is launching with an array of content from US and Dutch film and TV producers, and is also highlighting its own original series as part of the marketing push.

Price point broadly mirrors that seen in other European markets where Netflix has launched - pricing in Finland is also €7.99 per month, with UK pricing at €7.11 (£5.99), Ireland at €6.99 and Sweden at €9.10 (79 SEK). Service will be available across the standard array of connected devices - PCs, iOS/Android/Windows tablets and smartphones, games consoles, connected TVs and a selection of additional devices.

IHS anticipates that uptake of Netflix in the Netherlands will be strong, and the impact on the size of the Dutch online video market dramatic. Netherlands has one of the highest broadband penetration rates globally (upwards of 80 per cent of Dutch homes now have broadband), solid broadband infrastructure (50 per cent of broadband homes have DOCSIS or FTTH connections) and demonstrable consumer willingness to pay (over 90 per cent of homes take some form of pay TV).

However, to-date, paid-for services have been lacking in the Netherlands. There are few other subscription services of note (local service Ximon, backed by Filmproducenten Nederland, has been active for the last few years), the transactional video market has only been represented by Microsoft's Xbox Video and Apple's iTunes (with no Sony or Google services yet). And despite moves from local providers reacting to Netflix's announcement of intention to launch in the Netherlands earlier in 2013 (RTL acquired a stake in local provider Videoland, intending to explore subscription options), the market for Netflix is still wide open, with the only real competition being Chellomedia's multiscreen service Film1 Go (and to a lesser extent HBO which launched HBO Go in February 2012), and we expect rapid exploitation of this fact.

One factor which might impact the uptake of Netflix in the Netherlands is the state of the Dutch economy, which has seen real GDP declines in 2012 with more anticipated for full-year 2013. Weakness in the economy impacted both traditional TV (with advertising revenues slipping in 2012 and not expected to recover in 2013) and online video (which saw declines in advertising revenue in 2012).

Normally, weakness in the economy might prove to be a hidden boon for Netflix - consumers looking for the possibility to cut back expenditure on traditional media services could find Netflix an attractive alternative - particularly when paired with free digital terrestrial or satellite broadcast platforms. But the 'utility' nature of the Dutch market - the fact that many consumers take pay TV services by default as part of their housing/tenancy contract - makes such trade-offs less likely. Consequently, we see Netflix being primarily a supplemental service, added on to existing cable or IPTV packages - the economic weakness is likely to be more of a liability for the new entrant as a consequence. Given the strong nature of cable and IPTV services in the Netherlands (two thirds of homes take cable, nearly a fifth take IPTV), marketing and distribution agreements similar to that unveiled by Virgin Media earlier in September 2013 would be a sensible move for the online video player. Nonetheless with online competition basically limited to Film1 and HBO, Netflix is starting its Dutch life in a strong position.

IHS will be adding Netflix to its Netherlands online video forecasts imminently.

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