Netflix Jump in New Users Fuels After-Hours Stock Surge
Written by: Shalini Ramachandran and Maria Armental
Blog by: Craig M. Banner
Netflix greatly exceeded its expectations in terms of subscribers and overall growth in the third quarter of 2016, which caused its stock and overall user enrollment to rise approximately 20%. What’s interesting to Netflix investors and other stakeholders is that much of the 3.2 million additions came from international subscribers, underscoring the company’s efforts to emulate its domestic success across a global scale. Despite this, Netflix’s global expansion across 130 countries is causing concern for Wall Street investment firms by creating a volatile market for the video streaming industry as well as an inability for these companies to accurately forecast future predictions. While the company has experienced recent international success, Netflix acknowledges that shifting international regulatory requirements and uneven internet bandwidths create an uncomfortable environment for the firm’s senior management and investors. Due to this relative unease, the company is looking at different methods to leverage this potentially volatile environment and the firm’s growing costs of providing content with ways to attract new international subscribers. Netflix also acknowledges that tinkering with its global expansion will likely mean that it will lose money and subscribers while the company attempts to solidify its international brand. Finally, Netflix is keeping its eye on continuing its domestic expansion while growing its international brand to ensure that it does not alienate its core group of consumers.
Netflix should consider the tactical considerations associated with international advertising as it continues its global expansion. Some of these factors include availability, cost, coverage, and market data within an international context. When considering availability, Netflix should consider how effective the company’s advertising will be in locations that tightly control their media outlets, like China and Russia. Costs will also vary widely across different countries; as mentioned above, the company would do well to recognize how regulatory requirements can affect its ability to target customers in different countries with an international flair. Coverage is an important consideration across Netflix’s international marketing techniques, as its increasing content costs will limit what it can provide to various countries. Market data links availability, cost and coverage considerations together. Ensuring that comprehensive research is done in advance and adequately describes how international availability, cost, and coverage works within various countries will provide a vantage point that accurately and consistently links circulation with audience tastes and preferences.