Hoping to decrease nervousness among its investors, video rental and streaming company Netflix announced its reached a milestone of 1 million subscribers in the U.K. and Ireland today.
Netflix launched in the U.K. at the beginning of 2012 with hopes of challenging Amazon-owned competitor LoveFilm for the spot of top video subscription service. The company said it reached the milestone number of subscribers in just over seven months, faster than any other international market in which it operates.
Investors are definitely paying attention to international subscription rates because of the company’s current business strategy, which includes launching its service into foreign markets using profits from its domestic streaming and DVD rental revenues. Netflix also operates in Canada and Latin America, and it recently announced that it’ll launch in the Scandinavian market.
As we’ve pointed out in the past, Netflix’s best strategy for growth is to concentrate on dominating the global market for streaming video services before others establish an unassailable presence. While Wall Street analysts don’t necessarily disagree with the strategy, it does present some risk. This is because a failure in one (or several) of Netflix’s foreign markets has the potential to negatively impact its successful markets (the U.S. and Canada). Such failures might mean Netflix has less money to spend on expensive licensing agreements or producing original, exclusive programming.
But that hasn’t stopped the company from staying aggressive, which is apparently paying off in the short-term. Netflix CEO Reed Hastings recently revealed that he intends to outbid BSkyB for streaming movie licensing rights in the U.K.. That could cost quite a bit of money, as PaidContent points out.
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