Question 1

Why is Netflix shifting its focus away from the US market?

Accepted Answer

US subscriber growth is decelerating, forcing the company to pivot toward a global addressable market of 550 million broadband homes. International members drove 72% of total growth in 4Q 2015, contributing 4.04 million net additions to the global base.

Question 2

How is the company funding this massive global expansion?

Accepted Answer

Aggressive investment in marketing and content has pushed free cash flow down to -$276 million as of 4Q 2015. To improve margins, Netflix is implementing price hikes in the US to offset an international ARPU of $7.34, which currently lags the domestic rate of $8.63.

Question 3

What is the strategy for dealing with studios that won't grant global rights?

Accepted Answer

Netflix is aggressively reducing its reliance on third-party regional licenses by scaling its own production. The company has committed to delivering 600 hours of original programming in 2016 to ensure content availability across its 130 new markets.

Question 4

Is the expansion into smaller markets like Australia showing results?

Accepted Answer

The strategy is gaining immediate traction, with Australian subscribers reaching 1.035 million by the end of 2015. This contributes to a total global membership of 74.76 million, validating the rapid 130-region expansion model.

FLASH – Netflix goes truly global – but will the Studios play ball?

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