Netflix Gets Even in Sweden

Let's place one more stamp in Netflix's (Nasdaq: NFLX  ) growing passport today.

The video service provider officially rolled out its streaming platform in Sweden this morning.

The launch isn't a surprise. Netflix announced that Scandinavia would be its next international expansion market two months ago. Denmark, Finland, and Norway should follow suit later this week.

However, every market poses unique challenges and opportunities for Netflix.

In Sweden, the service isn't exactly being offered at the same $7.99 price point that stateside consumers enjoy. The monthly price of 79 Swedish kronor translates into roughly $11.81. Will it be too high for content that is thorough but not as deep as its domestic digital catalog?

Netflix also isn't alone.

Just as Netflix ran into BSkyB and's (Nasdaq: AMZN  ) LOVEFiLM in the U.K. earlier this year, Netflix isn't exactly planting the flag in Sweden. Viaplay is already an entrenched Nordic market leader, delivering online access to TV shows, movies, and sports.

Yes, Netflix. Sports. Live athletic contests may be something that Netflix will have to look into if it wants to succeed in Scandinavia.

Netflix's arrival this month also coincides with Time Warner's (NYSE: TWX  ) HBO launching as a stand-alone service in the same four countries. This is important. It's the first time the premium movie channel is making its popular content available without requiring a cable or satellite TV subscription.

Perhaps the overseas competition that Netflix has faced after easier transitions into Canada and through Latin America and the Caribbean is what's inspiring the company to move this quickly. The last thing it wants is to hit a new country where the victor has been decided before it ever had a chance to compete.

There are still a few morsels of good news here. For starters, this mid-October rollout means that Netflix should return to overall profitability by early next year. Netflix's profitability has tanked as it enters new markets, and the company already warned this summer of an outright loss during this year's fourth quarter.

Netflix is also making regional alliances to play nice with the locals. For instance, Netflix is teaming up with Sweden's Spotify to allow for free Netflix access for Spotify's premium accounts through the end of this year.

There's a world of opportunity for Netflix, but investors won't be happy until the company finds a way to expand its geographical turf without sacrificing profitability.

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Longtime Fool contributor Rick Aristotle Munarriz owns shares of Netflix. The Motley Fool owns shares of and Netflix. Motley Fool newsletter services recommend and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (4) | Recommend This Article (1)

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  • Report this Comment On October 15, 2012, at 4:20 PM, pauldeba wrote:

    I thought Latin America was an unmitigated disaster that Netflix will probably never be able to recover from?

    I am not sure how it was an "easier transition", considering it will never ever make a profit down there.

    The churn will be intense, everyone I know there thinks the library is "basura".

  • Report this Comment On October 16, 2012, at 11:35 AM, mountain8 wrote:

    You are entitled to your opinion. I haven't seen anything indicating what you state. Please note your sources. Until you publish your sources, I might as well believe the following:

    Your thoughts are only your perception, not facts. Probably formed from scheming with other shorts you have listened to. You must be losing a fortune. Sorry I can't sympathize. You pay for your bad bets when you gamble.

    Latin America is an unmitigated disaster, probably but Netflix may be it's savior, i.e. cheap recreation for all those poverty stricken people. They'll save money on travel to America.

    "Easier transition" is relative. Easier transition relative to what, birth? Only Netflix knows for sure. . There's not a broker in the world or a media source that "KNOWS". If you believe them... good luck. You're on your own.

    Never is a long time.

    We have no idea what the churn will be. Neither do you or who you listen to. Churn also changes over time. What will it be on May 30, 2321.

    I have no idea what a basura is. Please speak english. I'm an american.

    In summary my opinions above are my opinions. I haven't researched any of it. SO DON'T F870KIN BELIEVE ME. OR THIS GUY. Grow up and get a better job.

  • Report this Comment On October 16, 2012, at 11:36 AM, mountain8 wrote:

    P.s. "everyone you know" may be just the other short gamblers you know. What does your mother think?

  • Report this Comment On October 16, 2012, at 2:56 PM, pauldeba wrote:

    "I haven't seen anything indicating what you state. Please note your sources."

    Check Internet traffic and internet ratings, only mexico has cracked the Top 125 websites of their country in latin america. UK is still below Lovefilm.

    netflix entered 40 countries at once and they had no idea that people's credit cards could not continually get charged subsciption based without approval due to high levels of fraud, Netflix admitted as much.

    Poverty stricken people don't have high speed internet at home, in fact people with high speed internet don't have speeds the provider says they do.

    I asked a lot of people throughout the region, and I ahve lived and worked in Latin America for almost 20 years, and netflix simply doesn't work, netflix is for shut-ins and old maids, Latin america still has strong families so time to waste on netflix is limited. high speed internet is double the price of the US and 10% of the penetration.

    we have an incredibly good idea what churn is, in the US it HAS ALWAYS been between 14% and 15% of gross subscribers, never over, never under.

    The search and internet traffic tanked 11-15% for 3 weeks during the Olympics. That means higher churn and probably lower signup, we'll see next week.

    They started desperation spam emails at quarter end again - just like they do every bad quarter. reed quits MSFT board to "spend more time with NFLX co-workers".

    You don't have to belive me that the catalog is "basura", but it is obvious that the selection is very limited according to everyone I asked (none of whom are short NFLX, most of them don't even know NFLX is a publicly traded company.

    why not search articles on NFLX in Major Latin american newspapers (or Swedish ones) - look at all the comments - People simply think the product outside the US is not worth it and won't sign up. Anyone that has had Netflix for 6 months or more, knows the content gets stale and most eventually cancel.

    Don't believe me that's fine, we'll see next Monday.

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