Market Insight

Netflix to continue European expansion with 6 new market launches

May 14, 2014  | Subscribers Only

Irina Kornilova Irina Kornilova Manager, Research and Analysis, Broadband Media
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Netflix has confirmed plans to expand further in Europe later in 2014 by launching in Germany, Austria, Switzerland, France, Belgium and Luxembourg. Subscribers in these countries will gain access to Hollywood and local TV series and movie content, as well as Netflix original series on a range of connected devices.

At the time of writing no further details on pricing, content and rights, supported devices, or an exact launch date have been revealed.  However, IHS expects new Netflix launches to have similar prices to those seen in other European markets.

Outside of the Americas, Netflix is already available in the UK and Ireland, Denmark, Finland, Norway, Sweden and the Netherlands. 

Our Take:

Further expansion in Europe is backed by Netflix’s recently reported success of its international division, which has seen strong subscriber and revenue growth (See more:

As with Apple’s iTunes store in the transactional online video arena, Netflix has a tendency to shape SVoD markets in countries in which it launches. At the point at which Netflix launched in the Netherlands (at the end of 2013), the Dutch standalone SVoD market was almost non-existent with no major players and under 5K subscribers, but by the half year point in 2014 IHS forecasts indicate Netflix subscribers will reach over 0.5m in the Netherlands. Netflix’s focus on high quality original TV series, strong attempts to get at least one exclusive first subscription pay TV window rights set, and widespread connected-device availability help Netflix to establish its position in new markets.

The list of new countries roughly falls into two clusters: GSA: Germany, Switzerland, Austria region and Francophone markets: France, Belgium and Luxembourg.

Germany is the second largest OTT market in Europe, with strong local competition from both bundled subscription services, like Sky Go by Sky Deutschland (which holds the majority of premium movie rights) and Amazon Prime Instant Video, as well as from standalone subscription services, including ProSiebenSat.1-owned Maxdome, Watchever by Vivendi, and the recently-launched Snap by Sky Deutschland. The position of ad-funded OTT services by German commercial broadcasters ProsiebenSat.1 and RTL is very strong. Furthermore, Netflix will also have to contend with general unwillingness to pay for the content on the part of German consumers.

In contrast, Austria and Switzerland don’t have as developed an OTT market as Germany, with the majority of services present either pay TV operator multiscreen/TV Everywhere offers or German services which have regional rights.

With regards to the French market, Netflix will compete with a limited number of companies online - mainly the standalone SVoD service from premium channel group Canal Plus (Canal Play Infinity), but also with other small local players, such as independent service FilmoTV. The SVoD sector in France is relatively small compared to other Western European markets, primarily due to the strength of the French pay TV sector and the prevalence of low-cost telco-backed IPTV services. The country also has specific legislation for audiovisual content, including a 36 month SVoD window for films following their local theatrical release. Netflix has been actively discussing options to improve its chances with local market stakeholders – IHS analysis indicates that in order to drive a strong reception among consumers, the company should consider striking deals with key telecoms groups for inclusion on their IPTV set-top boxes – without doing so the streaming service provider will find the telcos some of its strongest competitors.

To-date, the SVoD market has also been lacking in Belgium. There are few very small niche SVoD and bundled online video services from local pay TV operators (including Belgacom and Telenet), but no strong existing standalone competitors as in France or Germany. However, given the very high cable TV penetration in Belgium, similar distribution deals to that which Netflix has struck with Com Hem in Sweden and Virgin Media in the UK will place the streaming player in the best position to capitalise on the Belgian launch.

IHS forecasts that these new launches will contribute over 2.5m additional paying subscribers by the end of 2015, assuming an early Q3 2014 launch. This would represent 13% of the company’s paid international subscriber base. IHS’s Netflix forecasts already include Belgium, France and Germany. Austria, Switzerland and Luxembourg will be added shortly.


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