Over the past decade, as more consumers “cut the cord” and dropped broadcast television services, demand for video streaming services in the United States boomed. Netflix is the most prominent benefactor, accounting for an estimated 27.6% of industry revenue. And while the company still generates the majority of its revenue from the United States and Canada, any Netflix user will tell you there has been a recent uptick in non-domestic content over the past five years. Furthermore, in 2021, North America will make up 33.9% of total paid subscribers, down from 52.8% in 2017 (latest available data).
Netflix expansion timeline
- 2010: Netflix expanded to Canada
- 2011: Netflix expands to over 40 countries in Latin America
- 2012: Netflix expands to the UK, Ireland, Denmark, etc.
- 2014-15: Netflix expands to Germany, France and Spain.
- 2016: Netflix expands to over 130 countries and territories.
- 2021: Netflix expands to over 190 countries worldwide.
Going abroad
By the mid-2010s, the North American market began showing signs of saturation, so Netflix set its sights on Europe. By 2015, most of the region gained access to the company's services. The key to retention? Netflix licensed and produced content for the market in Europe.
The results exceeded expectations, resulting in international hits like Casa De Papel or Money Heist. To keep up with rising demand, in 2019, Netflix announced plans to produce 221 projects, including 153 originals, an increase of 57.0% from 2018. Further, Netflix announced a 10-year agreement with Shepperton Studios, allowing the company exclusive access to all facilities and sound stages.
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Netflix’s global expansion began in Europe but swiftly progressed to Asia.
- In 2017, the Asia market accounted for 5.1% of Netflix streaming revenue
- In 2021, the Asia market doubled, accounting for 11.1% of Netflix streaming revenue
Still, like the company’s European expansion, its success in the region largely stems from content made in the region for the region. Consider the Korean thriller Squid Game, which became Netflix's most-streamed show in a 28-day period with 1.65 billion viewing hours, more than doubling the previous entry, Bridgerton (625.0 viewing hours).
Given Squid Game’s regional and international success, Netflix has increased its involvement in South Korean dramas and movies, becoming the international distributor for many upcoming productions. Truly, nothing sums up Netflix’s global expansion more than the preview of their latest production, the South Korean remake of Money Heist.
Where to next?
The domestic market has shown significant stagnation over the five years to 2022. Moving forward, Netflix must focus on two points: retaining its large domestic subscriber base and finding new markets to enter.
Netflix’s proven success in Europe has it doubling down in South Korea, but competitors are noticing. Further, Netflix’s 4th quarter 2021 projections fell short of expectations, causing their stock to drop 21.8% when earnings were released on January 20, 2022.
Will Netflix’s globalization plan help them rebound? We'll have to wait and see.
