Netflix to launch in six European countries this year

[May 21, 2014]  By Lisa Richwine

LOS ANGELES (Reuters) — Netflix Inc will launch its online movie and TV subscription service later this year in France, Germany and four other European countries, in a major push into new markets.

The other new countries Netflix will enter in late 2014 are Austria, Switzerland, Belgium and Luxembourg, the California-based company said in a statement on Wednesday.

Netflix previously said it planned a substantial expansion in Europe this year but had not said specifically where. The costs of launching in the new markets will keep the company's international unit at a loss, Netflix said in an April 21 letter to shareholders.

The company will offer a mix of Hollywood, local and global TV series and movies in the new markets. It plans to include Netflix original shows such as "House of Cards" where possible, but the company doesn't have rights to all Netflix shows in all markets. Details on programming and pricing in each country will be announced later.

Netflix currently has 48 million customers for its monthly subscription service in more than 40 countries, with 35.7 million of them in the United States, where it dominates the subscription video on-demand market. In Europe, the company has been operating in the UK, Scandinavia and the Netherlands.
 

Germany ranks first among European countries in the number of broadband households, with 29.1 million in 2013, according to estimates from SNL Kagan. France is third with 24.7 million, behind Russia.

Netflix will compete with other video streaming services, such as Canal Play Infinity from Vivendi's Canal Plus in France, and Amazon.com Inc's Prime Instant Video in Germany.

In addition, France has a complex set of rules on when movies can be released in different formats. The rules prohibit a film from appearing on a monthly subscription video service until three years after its debut in theaters, though it can be rented through a set-top box four months after its premiere.

Netflix's international unit is losing money as it spends to buy content and market the service.

In April, Netflix reported a loss of $35 million for its international segment, less than half of what it was a year earlier. The company said its international territories at the time were on track to become profitable this year but that its planned expansion into Europe will keep our expanded international segment at a loss.

Netflix gets about a quarter of its streaming revenue from international operations. The company said it expects its international business to eventually surpass the U.S. market. The U.S. streaming business reported a $201 million profit for the March quarter.

"We intend to continue our international expansion over the coming years, so our near-term profits will be quite modest as we invest in this large global opportunity," the company said in its April letter.

(Reporting by Lisa Richwine; Editing by Steve Orlofsky)

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