Investors got just the news to confirm hopes that Netflix is on track for the kind of growth to justify its stock price and after expanding to Canada, the company will launch its online streaming service in 43 countries in South and Central America along with the Caribbean later this year. Netflix members from Mexico, Central America, South America and the Caribbean will be able to instantly watch a wide array of American, local and global TV shows and movies right on their TVs via a range of consumer electronics devices capable of streaming from Netflix. Members in the region will be able to access Netflix in Spanish, Portuguese or English…………..
Expanding its reach from two countries to the entire Western Hemisphere, Netflix will launch its successful online film and television subscription service across Latin America in a bid to maintain its sky-high subscriber growth and stock price. Netflix boasts more than 23.6 million subscribers and has become the nation’s No. 1 movie rental provider, announced Tuesday that this year it will expand into 43 countries in South America, Central America and the Caribbean but not Cuba. The company did not specify a launch date. The news sent Netflix‘s stock soaring 8% on Tuesday, closing at a record $289.63. That put the company’s year-to-date share-price increase at 65%. Though reports had previously indicated the company was eyeing a move south, analysts said few on Wall Street had expected it would boldly launch simultaneously throughout the entire region. “This is a big opportunity as they make the transition from a U.S. company into a global one,” said Anthony DiClemente, an Internet and media analyst at Barclays Capital. “It’s a very material revenue opportunity if you extrapolate their ability to do this in other parts of the world.”
Analysts estimated that there are about 40 million broadband Internet subscribers in Latin America. Michael J. Olson of Piper Jaffray predicted that about 1.25 million of them would be subscribers by next year, while DiClemente said the number could be much higher, about 3.7 million. That could boost Netflix‘s revenue next year anywhere from $120 million to $350 million. Last year the company’s total revenue was $1.67 billion and net income was $115 million. Investing in new markets will also mean some initial losses at Netflix, however. The company previously said it would lose $50 million to $70 million in the second half of this year from overseas operations. Netflix’s decision to go into Latin America underscores the region’s growing importance to Hollywood. In 2010 it was the fastest-growing market for movie ticket sales, according to the Motion Picture Assn. of America. Led by regional powerhouses Brazil and Mexico, total box-office revenue grew 25% last year. Netflix had also been considering going into Britain, a move that has apparently been delayed, according to people briefed on the matter who were not authorized to speak on the record.
Netflix Chief Executive Reed Hastings has identified international expansion as key to his company’s growth. On the company’s last earnings call in April, Hastings said Canada would be a test of how successful the company could be in foreign countries with a streaming-only offering. In seven months, it amassed 800,000 subscribers in the country, a figure that should soon surpass 1 million. Netflix also projected that it would reach profitability in the country by the third quarter of 2011, a full year ahead of its initial estimate. Foreign markets will be crucial if Netflix is to keep its base of subscribers surging. In the first quarter of this year, its total was up 63% from the previous year, a figure that Hastings has acknowledged is not sustainable in the U.S. alone. The company said its service in Latin America would be available in English, Spanish and Portuguese and include a mix of American and local films and television shows. It has yet to announce a price for the region, though analysts said they expected it would be similar to the $8-a-month fee it charges in the U.S. for online streaming. Netflix did not say how much content would be available in Latin America. It currently has more than 12,000 titles in the U.S. and more than 1,250 in Canada.