Netflix is open to teaming up with local players to enter Asian markets, the company’s CEO Reed hastings said during Tuesday’s third-quarter earnings call. Asia was a tough market for western companies to enter on their own, explained Hastings, and the idea of partnering up with a local player is “definitely a factor” Netflix is considering, he said.
However, Hastings ruled out similar partnerships for further expansion into continental Europe. Netflix hasn’t said yet where it wants to go next; the company has a policy of returning to global profitability before it enters any additional foreign markets.
Hastings and Netflix CFO David Wells got some pointed questions about their international plans during Tuesday’s call, with some analysts apparently feeling that the company should slow down on its plans abroad and instead focus on improving its domestic performance. Netflix only added 1.16 million domestic streaming subscribers in Q3 of 2012, and the company lowered its forecast of total subscribers for 2012 from 7 million to 5 million.
The picture is looking a little better abroad, but questions remain about several of its new markets, with one analyst even asking whether the company is considering to pull out of select countries in Latin America. Wells dismissed that idea, and the company’s VP of Finance and Investor Relations Ellie Mertz instead explained how Netflix is working with local banks to make sure that people can actually pay for its service.
Wells also had some interesting insights to share into the role exclusive content is going to play for Netflix. Next year, exclusive content will still only amount for “certainly less than 10 percent of hours viewed, maybe less than 5 percent of hours viewed” on Netflix, he mused. But in the long term, the expectation is that the majority of content on Netflix will be exclusive content, he said, adding that it turns out to be a great investment: “Some exlusive content costs more, but it’s worth more because it is viewed more.”
Overall, the tone of Tuesday’s call was somewhat sobering. Netflix missed another subscriber goal, and Hastings said that he was tired of making excuses. “It is what it is, and we are moving forward,” he said during his closing statement.
