Technology | Media | Telecommunications

Wednesday, December 17, 2014

The Netflix Disruption of Pay-TV Extends Internationally

Netflix has global mind-share, even though it's officially available in only a handful of countries. The consumer awareness of the subscriber benefits are a testament to the apparent pent-up demand for affordable over-the-top (OTT) streaming video entertainment services.

Growing interest in the Netflix video entertainment offering also demonstrates how the legacy pay-TV business model is equally vulnerable to disruption in other nations -- as it has already proven to be in the U.S. market.

Netflix is expected to achieve 17 million paying subscribers to its international operations by the end of 2014, following its official announcement of 14.4 million international subscribers in September.

Launches in six European countries during September will help to boost the total, according to the findings from the latest worldwide market study by Digital TV Research.

"We have made several adjustments to our previous estimates, based on the June results -- subscriber numbers are now a lot higher in Latin America and a little higher in Canada. Subscriber numbers are now a lot lower in the UK and a little lower in the Nordic countries," said Simon Murray, principal analyst at Digital TV Research

Moreover, Murray believes that they underestimated Latin America last time -- due to the historic payment problems that Netflix encountered (low credit card ownership; little electronic banking; low broadband penetration, etc).

Netflix has introduced simpler payment methods -- such as prepaid cards -- which has boosted new subscriptions. However, economic slowdown is expected in the region, especially in Argentina and Venezuela, which could affect Netflix adoption.

These international figures do not include subscribers to the U.S. service who are based abroad (these homes are included in the U.S. subscriber count).

Using the American version of the Netflix service from another country has been achieved by some technically savvy consumers. Apparently, it is relatively easy to do this by using un-blocker software, VPNs and DNS proxies.

This practice is more common in Latin America and Canada than in Europe. Why is this attractive to new customers? The U.S. service provides more video content titles and more recent titles.

Netflix has announced plans to launch in Australia and New Zealand next March. However, it's believed that more than 200,000 Australian homes already subscribe to the U.S. service.

The following chart lists the subscribers in each of the international markets.