Speaking during a Q3 Earnings Call following a period in which Netflix reported net additions were lower than forecast, particularly for the US, CEO Reed Hastings has reaffirmed the company’s faith in its international expansion plans following its late summer launch in new Western European markets.
“We’ve done numerous launches now starting in Canada four years ago, so we’re getting better and better at it,” he said. “We’ve got some of the fastest integration with MVPD set-tops that we’ve ever seen in the world. In the US, we still don’t really have anything material. In the UK, it took us a year-and-a-half to get Virgin and we were able to announce Orange and Deutsche Telekom, and these are all going live shortly or just turned live or going live over the next couple of months,” he advised.
“So, really a great successful launch that portents well for us and that’s built in to the guidance. So, we’re feeling, I mean, just incredible about international when you think that from starting four years ago in Canada to – through to the Netherlands, so almost 40 countries, as a whole are now profitable, just an average of two or three years after starting. It’s a great success and that’s why we’re continuing to invest so rapidly at international,” he added.
In terms of 2015 international expansion plans, Hastings said the company was trying to figure out which markets were most attractive and would have some announcements to make over the next year. “If you look at our long-term strategy, we’ve been extremely consistent over the past three years, saying that, we’re going to take all of our profits and put them into international expansion, because we see it as such a big opportunity. So think of that as the base case if we can move quickly enough, then we can deploy all of those profits in highly productive ways,” he suggested.
David Wells, CFO, advised that Netflix peaked out of international loss at $105 million it guided in Q4 to a number that slightly lower than that. “But in terms of the potential down the road, we certainly could see that level of investment,” he admitted.