Netflix to Expand Video Service in Netherlands This Year

Netflix Inc. (NFLX), the leading online subscription video service, plans to expand to the Netherlands this year, part of a more measured growth strategy after stumbling in 2011.

The service will include films and TV shows from Hollywood, content from local and worldwide producers, and original series, including the Kevin Spacey political thriller “House of Cards,” the Los Gatos, California-based company said today in a statement. Prices and a start date will be announced later, said Joris Evers, a Netflix spokesman.

The Netherlands move marks the company’s first geographic expansion since Scandinavia last year. Chief Executive Officer Reed Hastings, stung by a 2011 investor and subscriber backlash when he tried to raise prices in part to fund rapid international growth, slowed his march to new overseas markets in 2012 after incurring losses entering 43 Latin American countries and territories.

Netflix rose 1.5 percent to $232.31 at the close in New York. The stock remains the best performer in the Standard & Poor’s 500 Index (SPX) this year, with a gain of 151 percent.

With a population of 16.7 million, the Netherlands ranks sixth in the world in households with high-speed Web access at 80 percent, according to the Organization for Economic Cooperation and Development. That’s slightly higher than France and Germany. With larger populations, those two countries also would cost Netflix more in content rights.

Many Competitors

Many Dutch speak English as a second language, helping Netflix avoid some translation costs. In Scandinavia, the streaming service is available in English, with local-language subtitles, except for kids’ content, which is dubbed.

Netflix will compete against the video-on-demand services of cable operators UPC, part of Liberty Global Inc. (LBTYA), and Ziggo NV (ZIGGO), as well as against Royal KPN NV (KPN)’s Web-delivered TV service, HBO and Film1, and movie-rental services such as Pathe Thuis. Another service, Ximon, offers one-time rentals, prepaid plans and a 9.50 euro ($12.73) a month subscription for a library of about 3,000 movies and television shows.

With more than 36 million customers globally, Netflix is using cash from monthly subscriptions to acquire exclusive content from Walt Disney Co., DreamWorks Animation SKG Inc. (DWA) and other studios, and to fund its own slate of originals.

Hastings has said the strategy distinguishes Netflix from other Web video suppliers, including Amazon.com Inc., the largest Web retailer and Hulu LLC.

Netflix said in April it would raise capital “as needed” to fund original programming while its expansion outside the U.S. absorbs cash.

To contact the reporter on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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