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Netflix hunkers down for the long haul in Europe

SVOD Netflix subscribers in Germany 2016

It has been almost two years since Netflix launched in Germany and France, and a year since its launch in Italy. How’s it doing in those countries? Not well, and it will take time to correct Netflix European growth problems.


Europe’s biggest market remains resistant to Netflix’ charms. SVOD services have entered the mainstream, with 43% of Internet users paying for services. However, this is one of the rare markets where Amazon dominates the market. Amazon Prime Video is used by 32% of SVOD users, or 22% of Internet users. Netflix is the second most popular service with 17% of SVOD users, followed by Sky Deutschland (12%), and Maxdome (11%.)


Penetration of SVOD services is much lower in France. Estimates put the penetration at about 12% in November 2015. However, analysis of the data suggests it is likely lower than that. The leading service is CanalPlay, which had 700,000 subscribers at the end of 2015. Netflix had 600,000 subscribers in January 2016.


Netflix launched in Italy, Spain, and Portugal a year after its launch in Germany and France. So, it is not surprising that the going has been very slow there. In a confusingly worded article in PrimaOnline, Netflix is estimated to have between 110,000 and 170,000 subscribers in Italy. Again, this is very weak performance, illustrating the struggles Netflix is having in Europe.

According to the article, a lack of local content is at fault. Without the all-important sport component, Italians are reluctant to pay for a service with little local content. Netflix is working to fix the problem. It will release its first Italian production in 2017, a 10-part organized crime drama called Suburra.

Where Netflix is strong

With the company struggling to find its footing in all its most recent Western European launches, it remains strongest in the countries where it launched first. This is no accident. The company carefully analyzed each potential market, are prioritized the ones it thought it had the best chance of succeeding in.

The UK remains Netflix biggest market in Europe. It was the second country the company launched in after Canada, and the substantial effort in time and money has paid off. There are 6.5 million homes in the UK with an SVOD service. 80% of those homes have Netflix. Because Netflix entered the UK market so early, it dominates in another way. Two-thirds of SVOD homes only have Netflix. Just 13% have Amazon as their only SVOD service, and 6% only have Now TV (from Sky.)

In the Netherlands, Netflix is still growing strongly. It had 1.3M subscribers at the end of 2015, an increase of 50% over the previous year.

Another area where Netflix entered early, and continues to dominate is the Nordics. For example, last year it had a penetration of 35% in Denmark, and 2 in 5 Scandinavian households subscribe to the service.

Why it matters

Netflix cherry-picked the European markets where it felt it had a high probability of success. It launched in those first, allowing it to grow quickly in places like the Nordics and the Netherlands.

More recent launches in countries like Germany, France, and Italy have struggled to establish any sort of growth momentum.

Expect to see growth continue to lag in those countries. To ignite growth, Netflix must do the slow, steady work necessary to expand local content, increase brand recognition, and strike distribution agreements with local operators.



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