Netflix’s CEO Sees Profit in Europe in 5 to 10 Years

Netflix Inc. expects to become profitable in Europe in five to 10 years, founder and Chief Executive Officer Reed Hastings said on Bloomberg Television.

“It will be challenging to be profitable,” Hastings said in an interview yesterday as the company began service in six European countries. “But we keep getting content and in the long term, in five or 10 years, we should be profitable.”

Netflix keeps its profit margins low as it invests in expansion and spending on movies and TV shows. In the second quarter, net income amounted to 5.3 percent of sales. The company has commitments to spend more than $7 billion on content over the next three years, filings show.

Netflix began service in six European markets: Germany, France, Austria, Switzerland, Belgium and Luxembourg. The Los Gatos, California-based video-streaming company already operates in Scandinavia, the U.K. and the Netherlands.

“It’s our biggest international launch ever,” Hastings said. “We’re licensing local content, developing it, and commissioning series.”

Netflix fell 3.9 percent to $457.75 at the close in New York yesterday, the most since July 22, after the company said an accelerated international expansion may hurt profitability. The shares have gained 24 percent this year.

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