Suddenly, Netflix is a "global TV network"
SAN FRANCISCO - Netflix (NFLX) has already crossed off the biggest item on its New Year's list of resolutions. The Internet video service debuted in 130 countries Wednesday in a surprise move likely to reel in millions of new subscribers.
CEO Reed Hastings revealed the scope of Netflix's expansion at the end of a presentation in Las Vegas at CES, one of the technology industry's marquee events.
"You are witnessing the birth of a global TV network," Hastings crowed on stage.
The news caught almost everyone off guard because Netflix had previously set a goal of being available in most of the world by the end of this year. It looked like the Los Gatos, California, company had plenty of work ahead it because it ended December in 60 countries.
Now, Netflix is available in 21 different languages and streaming in just about every market that it had in its sights, with the notable exception of China, the world's most populous country. Entering China may be a formidable challenge requiring potentially prickly negotiations with a government that blocks its citizenry from seeing material it considers objectionable or incendiary.
Netflix currently has no plans to push into North Korea, Syria or Crimea because of restrictions on U.S. companies operating in those countries.
Investors were delighted with Netflix's quantum leap across the globe. Its stock closed higher on Tuesday by $10.02, or 9.3 percent, to $117.68 on a grim day in the rest of the market.
The share price jump reflects a belief that Netflix is now in a position to sign up more subscribers this year than analysts had previously anticipated, generating additional revenue that the company can spend on TV series and movies as it bids against rivals such as HBO, Amazon, YouTube and Hulu for licensing rights.
Netflix began the year with more than 70 million subscribers, and management had already vowed to spend about $5 billion this year licensing video from studios around the world.
Increasingly, Netflix has been buying material that can be seen only on its service, with more than 600 hours of original programming lined up for this year. That slate encompasses more than 50 exclusive TV shows and movies, including award-winning series such as "House of Cards" and "Orange Is the New Black."
Although Netflix is now virtually worldwide, not of all its entertainment will be available everywhere. For instance, a prized licensing contract that gives Netflix the rights to Walt Disney films after their theatrical release will be limited to the U.S. and Canada as part of a deal negotiated several years ago. Hastings told reporters Wednesday that Netflix is hoping to expand those rights into other countries.
Netflix has come up with a formula that has proven addictive as its service has transformed the entertainment industry by allowing people to watch video anytime they want on an Internet-connected device.
Hastings revealed Wednesday that Netflix subscribers watched 42.5 billion hours of programming last year, including 12 billion hours in the October-December fourth quarter. The fourth-quarter viewership volume represented a nearly 50 percent increase from 8.25 billion hours the previous year.
Put another way, Netflix subscribers are now watching a weekly average of 13 hours of programming, up from 12 hours the previous year.
In remarks to reporters, Hastings likened the near-completion of Netflix's worldwide expansion to a parent having a baby. "It's a big deal, but the real work is the next 20 years," Hastings, 55, said.
One of Netflix's next challenges will be delivering on its promise to make its international operations profitable by next year. Hastings said the company is on track to fulfill that pledge.