Netflix, Inc. (NASDAQ:NFLX) will face a challenge to become profitable in Europe but that goal can be achieved in five to ten years, Chief Executive Officer Reed Hastings said in an interview with Bloomberg.
The remark by the Netflix, Inc. (NASDAQ:NFLX) boss comes after the company began another expansion in Europe with France being the first country in the region to get the service in this newest rollout.
“It will be challenging to be profitable. We’ve got a lot of content [and] we just keep getting more content and more content. But in the long term, if we go five and ten years, we should be profitable,” Hasting said.
According to Bloomberg international correspondent Hans Nichols, he has not yet tried Netflix, Inc. (NASDAQ:NFLX)’s offering but his home base of Germany is included in the latest round of expansion of the company.
Nichols goes on to say that it is worth mentioning that Netflix, Inc. (NASDAQ:NFLX) has a market capitalization of about $30 billion with a history of “phenomenal growth”. He said that the company wants to go outside of the U.S. but the country still remains its largest market that accounts for about 75% of its viewers of its 50 million subscribers.
Nonetheless, he noted that the problem that the company faces as it expands into more territories is that it does not have all the licensing agreements for the shows it carriers in other markets for the new markets it wants to penetrate.
According to Hastings, to solve this problem, the company is licensing local content in the countries they want to expand in as well as creating original content that they own. Nichols said that the company wants to have 80% of its revenue outside of the U.S. He noted that there was an 85% increase in international revenue for the company last year and that analysts are projecting that Europe will account for 20% of the company’s revenue next year.
Netflix, Inc. (NASDAQ:NFLX) shareholders includes Philippe Laffont’s Coatue Management which reported about 2.08 million shares in the company by the end of the second quarter.