Netflix’s success in the UK and the expected return to global profitability has led to the decision “to open an additional attractive European market in Q4 of this year.”
The company did not announce which market is targeted, but this could very well be Germany. Netflix also said it might bid for exclusive first-run movie rights.
“If the UK Competition Commission eventually forces Sky Movies to not control the pay-TV output from all six major studios, that then may provide an opportunity for Netflix to bid earlier for major studio deals than otherwise would have been the case. It is premature to know how it will play out,” Netflix wrote in a letter to investors.
Netflix surpassed 3 million total international streaming members this quarter, growing 65% sequentially, and adding 1.2 million total net additions (and nearly 1 million paid net additions).
In six quarters after its first international market launch, non-US members account for nearly 12% of total (and 10% of paid) Netflix streaming members.
The largest driver of growth in international members in Q1 was the launch of Netflix in the UK and Ireland at the beginning of January. From the start, the company said it achieved the highest net additions they’ve ever seen in the first 90 days of an international market launch.
“While the UK is a very competitive market, we have found that the existence of competition can be beneficial for driving interest and demand in our service. The existence of other over-the-top (OTT) streaming and on-demand services creates a high level of product understanding and acceptance among consumers and that, in turn, increases their willingness to try Netflix.
“From our experience to date, we continue to believe our biggest competitors will be Sky Movies and Sky Atlantic (and potentially Sky’s yet-to-be-launched Now TV streaming service), as well as Lovefilm. Without details on consumer pricing or content selection, it remains unclear whether Sky’s Now TV will be a meaningful competitor. Ultimately, we believe we are well positioned to succeed in the UK and Ireland based on our content selection as well as our superior streaming technology.
“In the UK and Ireland we launched with our most broad-scale Facebook integration to date, and are pleased with the level of consumer engagement. Social TV show and movie discovery is heavily used by our Facebook connected members.”