The media is agog with Netflix’s latest posted losses, including a second quarter loss of over $92 million and a two percent drop in stock prices, but this is far from the end for the streaming entertainment giant.
In fact, though, this is only the beginning. Netflix’s Chief Executive Reed Hastings has a long term plan to bring about massive profits, but before they can be realized the company’s going to have to spend some money.
It’s a very long-sighted vision in an economy that demands constantly improving profit margins, but Netflix intends to take their service to an international audience, one country at a time. Japan, Portugal, Italy and Spain will come online later this year and the massive untapped market in China is in their sights for later expansions.
How Much How Fast?
Netflix’s aggressive expansion plans have been terrifying to investors, who are watching as the company continues to pile on loss after loss each quarter. Hastings addressed these concerns in a conference call with them, saying that “How we do in the first year in a new market is not that determinate of the long-run.” It takes time to test those waters, he assured them, explaining that after initial testing Netflix will “have a clearer picture of how we will do in markets that are quite different from the US.”
Between these international excursions and its continued efforts to bring new and original content to their domestic streaming service, Netflix continues to add customers at a dizzying pace. Its recent performance has exceeded all expectations, with 3.28 million new users signing up. Of those, 900,000 were American subscribers, while a whopping 2.37 million came from abroad. They expect to add another 1.15 million domestic and 2.4 million international customers during the third quarter of 2015.
Ultimately, Netflix hopes to see membership in the 60 to 90 million user range in the U.S. alone, still a far cry from the 42.3 million subscribers it has now. Even so, with long-ranging plans to cover the globe and investors with iron stomachs, Netflix stands to become the largest streaming service on the globe and the most influential player in the media industry in the not-too-distant future.