Theres been no sugar coating for Netflix (NASDAQ: NFLX ) the past few months.
America has been inundated with stories of the companys numerous gaffes and
subsequent stock flops. Still, Netflix persists. With its reputation bruised and
broken here in the U.S., Netflix is looking outward to new markets to start
regenerating lost subscribership. Its been a bad scene down in Los Gatos, Calif.
Shares plummeted down to a 52-week low $74.25 last week. The company lost
800,000 subscribers in a quarter. Netflix started up a new brand, Qwikster, to
spin off its by-mail DVD rental business then announced to the world it was
kidding about that after all . And it wont get better quickly. Netflix is
projecting that its subscribership will fall to between 20 and 21.5 million by
the end of the fourth quarter, and expansion costs are going to keep the company
spending big well into 2012. But its through those expansion costs that Netflix
hopes to pull itself up and dust itself off. This past summer, Netflix began
offering streaming video service 42 Latin American and Caribbean countries,
including Brazil, Mexico and Argentina, where the subscription fees started
between the U.S. equivalent of $7.99 and $10. Service in those countries started
in September, and Netflix has yet to announce subscriber numbers from these
newly minted Latin operations. Netflix also announced its move into Europe at
the end of October news that was overshadowed by its brutal loss of subscribers
in the U.S. While an exact date hasnt been set, Netflix will bring streaming
service to the United Kingdom and Ireland in 2012. While those two countries
dont seem like golden saviors for Netflix on the surface, they represent a
significant new subscriber pool, though the company will face competition. Where
Netflix entered an all-but-empty streaming video market in the United States,
the Amazon -owned (NASDAQ: AMZN ) LoveFilm service has an established streaming
service overseas. There also is Sky, the broadcasting service whose streaming
video service Sky Movies is available on many of Netflixs key platforms,
including the Xbox 360 game console and the iPhone. The market still is wide
open, though, meaning Netflix has everything to gain. LoveFilm has 1.7 million
streaming subscribers , but theyre spread out across the U.K., Ireland, Spain,
Germany and other European countries. Sky has more than 10 million total
subscribers across all of its television services, but it has a limited number
of streaming titles available, meaning Netflixs available content will be a
strong lure for those customers. Speaking with Tech Radar , Sky Movies director
Ian Lewis openly admitted LoveFilm has more streaming options than Sky .
Netflix, in turn, has even more. LoveFilm has a library of 6,000 streaming
videos, where Netflix has a library of 20,000. (LoveFilms streaming options have
not been merged with Amazons own library of 13,000 videos.) Lucky for Netflix,
its content will carry over to these new territories as well. CBS (NYSE: CBS )
content, including Showtime programming, carried over into these new
territories. Netflix also renewed its relationship with Disney (NYSE: DIS ) this
week. Considering the announcement came so quickly after Netflix announced its
European expansion, it seems likely the company has secured that content for
multiple territories. Netflix will start slow. There are other all-too-potent
video markets waiting for the companys streaming business film-loving markets
like India, China and Japan spring to mind but the company naturally is going
to be cautious in the immediate future given the body blows it has taken in the
wake of the subscription hike and Qwikster fiascos. But the potential growth in
these countries means Netflixs first quarter of 2012 might not be as
catastrophic as expected. As of this writing, Anthony John Agnello did not own a
position in any of the stocks named here. Follow him on Twitter at
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