By 2017, Netflix thinks it can complete its global expansion and be in 200 countries around the world.
That's the lofty goal outlined by CEO Reed Hastings and CFO David Wells in the company's latest letter to shareholders. The company just reported its Q4 2014 earnings, posting a record 13 million new members (up to 57.4 million total) and $1.305 billion in revenue from its streaming service. Of that, Netflix was able to net $83 million, an increase from $48 million year-over-year.
"Our international expansion strategy over the last few years has been to expand as fast as we can while staying profitable on a global basis. Progress has been so strong that we now believe we can complete our global expansion over the next two years, while staying profitable, which is earlier than we expected. We then intend to generate material global profits from 2017 onwards," says Hastings.
"We already offer Netflix in about 50 countries and have learned a great deal about the content people prefer, the marketing they respond to and how to best organize ourselves for steady improvement. Acceleration to 200 countries is largely made possible by the tremendous growth of the Internet in general, including on phones, tablets and smart TVs. We intend to stick to our core ad-free subscription model. As with our initial round of international expansion, we’ll get some things wrong and do our best to fix them quickly."
In 2014, Netflix launched in France, Germany, Austria, Switzerland, and Belgium. Soon it'll finally come to Australia and New Zealand.
Netflix knows that expansion into some countries will be much easier than to others, but the company is ambitious – even discussing how and to what degree it could find itself operating in China.
"For most countries we have a good idea of the best approach for Netflix to take. For China, we are still exploring options — all of them modest. We’ll learn a great deal if we can successfully operate a small service in China centered on our original and other globally-licensed content. That is our preference, for the next few years, if we are able to acquire the necessary permissions," says the letter.
For Netflix, the benefit of rapid global expansion is threefold.
"It is advantageous for Netflix to become global in many ways. The big one is absolute size (faster to $10B in revenue) because that revenue allows us to develop and license more content for our members and improve our service. A second is being able to source great stories from around the world and deliver them to the world. A third is the efficiency and influence of being a unique global licensor that provides worldwide distribution."
Speaking of content, Netflix says it plans to debut 320 hours of its own content this year. Over the next few years, Netflix says it'll continue to spend more and more on original content.