Netflix eyes Swedish move

Sweden is at the head of Netflix targets for launch later in 2012 following the success of its first European operation in the UK and Ireland that kicked off at the start of the year.

Netflix has declared that performance, in the UK especially, has greatly exceeded expectations, claiming that it is winning customers from arch rival, Amazon’s LoveFilm. Without numbers being available, such claims are hard to verify, but Netflix has asserted that the UK and Ireland were major contributors to an overall gain of 3 million subscribers in Q1 2012, bringing the worldwide total to 26 million.

Netflix had stated it would pause in Europe after the UK launch to focus its efforts on the rapidly growing Latin American pay TV market during 2012. But, events have provoked a rethink. Netflix had identified Spain for its second European launch, then abandoned that partly because of sharp economic contraction there. But, much of northern Europe is still economically healthy and fertile ground for OTT, which is doing well across Scandinavia. Therefore, Netflix is now looking there, with Germany also a major target given growing willingness to pay for premium content there.

At the same time, Netflix has run into difficulties in Latin America despite continued rapid growth in conventional pay TV services in the major markets including Brazil and Mexico. Netflix launched in 43 Latin American countries last year, but nowhere has it matched the growth of Canada, the U.K. and Ireland, completely confounding expectations.

The problem is partly that Latin Americans are not yet attuned to downloading movies and TV shows online, and partly lack of sufficiently high broadband speeds. This suggests Netflix failed to do sufficient homework there, but one consequence is renewed interest in European expansion, at least across the north and center.