Video streaming company, Netflix Inc. (NASDAQ: NFLX) announced on Monday that its subscriber base in the U.K. and Ireland touched the one million mark since it made debut in the Europe back in January even as the company continues to grapple with slow growth rate in the U.S. market due to stiffer competition.
Netflix said that the pace of the growth seen in Europe was much faster than any other region where the company launched its services, which includes Latin America and Canada.
Commenting over the news, Netflix Chief Executive Reed Hastings said, “This membership milestone is evidence that Netflix has rapidly gained popularity in the U.K. and Ireland.”
In the recent past, Netflix has struggled to grow at brisk pace in the U.S. as rising competition from rivals such as Hulu, better on-demand services from cable-television providers, in addition to Coinstar Inc.’s (NASDAQ: CSTR) Redbox — which rents out DVDs at an incredibly low price of $1.20—hurt its subscriber’s base.
This is the reason why Netflix is striving hard to expand in international markets. Earlier, the company had announced its expansion plans in the Nordic region by the end of 2012.
Nevertheless, Fernando Elizade, an analyst at market research firm, Gartner believes that NFLX will have to expand globally at much faster pace to keep up with growth rates experienced in the past. Besides, he also said that strong demand from U.K. should not be taken as surprise because the video streaming market in the country is well developed. He also warned that expansion in on-demand video market of U.K, Ireland and Nordic region will not offset the stagnating growth in the U.S. market.
In the U.K, Netflix in coming months is likely to face strong competition from BSkyB’s online video streaming service— Now TV, launched in July.
Lately, in order to improve its performance, Netflix is trying to change its business model. Whereas initially Netflix used to rent DVDs and deliver them through mails, it now trying hard to switch over to more profitable service for past one year—which is delivering movies and TV shows through internet.
Still, results for the quarter ending June 30 were mixed. Although the company reported adding more than half a million subscribers in the U.S., it also lost 850,000 DVD only accounts.
Furthermore, the company also warned its video streaming business slowing down in the current fiscal year even as it booked a 91% fall in fiscal second quarter income.
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