In that sense, the first phase of its globalization process was consistent with the traditional model of expansion.
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In doing so, the company learned how to expand and enhance its core capabilities beyond its home market. Netflix was thus able to develop its internationalization capabilities in locations where the challenges of “foreignness” were less acute. For example, its earliest international expansion, in 2010, was to Canada, which is geographically close to and shares many similarities with the United States. Rather, it carefully selected its initial adjacent markets in terms of geography and psychic distance, or perceived differences between markets. Netflix did not try to enter all markets at once. Netflix’s success can be attributed to two strategic moves - a three-stage expansion process into new markets and the ways it worked with those markets - which other companies looking to expand globally can use too. Now Netflix, with its global reach, has more subscribers worldwide than all other pure streaming services combined. Yet the majority of Prime subscribers are in the U.S., and Netflix has managed to make inroads into even those markets where Prime arrived first. In some countries, like Germany and India, rivals such as Amazon Prime were already established. In France and India, for example, homegrown leaders offer local-language video content, thus depriving Netflix of first-mover advantage.
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And many potential subscribers, accustomed to free content, remain hesitant to pay for streaming services at all.įurthermore, strong competition in streaming already exists in many countries.
International subscribers, many of whom are not fluent in English, often prefer local-language programming. It also must face a diverse set of national regulatory restrictions, such as those that limit what content can be made available in local markets. Netflix must secure content deals region by region, and sometimes country by country. But Netflix’s globalization strategy, and many of the challenges it’s had to overcome, are unique. internet companies have scaled internationally, of course (Facebook and Google are two obvious examples). before 2010, and in only 50 countries by 2015.
This is a remarkable achievement for a company that was only in the U.S. In the second quarter of 2018, its international streaming revenues exceeded domestic streaming revenues for the first time. By 2017 it was operating in over 190 countries, and today close to 73 million of its some 130 million subscribers are outside the U.S. Netflix’s global growth is a big factor in the company’s success.
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