Hollywood rag Variety reports that Netflix has figured out how to enter Europe. According to Variety's connections inside European film distributors, Netflix is going to Spain and the United Kingdom next.
Hot on the heels of a pan-American and Caribbean expansion in 2011, Netflix is looking at the already contested British market alongside the radically different Spanish market for an early 2012 introduction.
- In Britain, Amazon.com (Nasdaq: AMZN ) already established a foothold in streaming video services by buying local provider Lovefilm. Netflix will have to fight for every inch of this battlefield against an existing rival with nearly 2 million subscribers.
- Spain doesn't have an incumbent provider like Lovefilm, but is known as a piracy hub. That's a very different set of challenges, though Netflix should be able to apply lessons learned in South America in many ways.
After invading its first European shores, Netflix would then expand -- either slowly, like in North America, or suddenly, like its incursion into Latin America -- to the rest of Western Europe. Covering the Old World, from Greece to Iceland and Portugal to Finland, would open a potential market of more than 400 million people with generally advanced access to broadband Internet connections and reasonable disposable income levels.
The early bird gets a nice breakfast, and Netflix is an early worm hunter here. Amazon will definitely put up a fight and might have expansion plans of its own. For other tech giants to catch up, they'd need to make some drastic investments in basic technologies, networking infrastructure, and studio relationships, which is a rare combination in the wild today.
Apple (Nasdaq: AAPL ) has the networking and technology components figured out but lags in Hollywood ties; Google (Nasdaq: GOOG ) is in roughly the same boat; and whoever buys Hulu will get the cozy studio relationship and completed technology puzzle without the global reach.
Expect analysts to ask some tough questions about international expansion when Netflix reports earnings next week. Oh, and remember those pricing changes I asked you to forget for a while? We need to know more about how that move fits into the plans for global domination as well. I'm thinking that it's all connected.