Netflix Plans Move Into Japan In 2015

By Patrick Hipes, Dominic Patten

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Netflix has been talking up its plans to continue its overseas march, and now it is poised to conquer a new territory: Asia. Deadline can confirm that the streaming service will enter the Japan market in 2015, which will make it the streaming service’s first Asian market.

The news, first reported by CNBC this afternoon, was expected, with global expansion a priority especially after Netflix earlier this month reported stronger-than-expected subscriber growth overseas and as-expected results in the U.S. for its Q4 earnings. At the time Netflix counted 18.3 million subs overseas, up 2.4 million for the quarter and beating its forecast for 2.2 million.

On Monday, Netflix formally unveiled a plan it mentioned to analysts last month to raise $1 billion in debt to fuel its its programming and global expansion efforts. That didn’t go over so well on Wall Street, though: Standard & Poor’s Ratings Services dropped its rating of Netflix bonds from BB- to B+ — a so-called “junk” rating that means they’re too risky for pension funds and others restricted to investment grade bets. Moody’s Investor Service also considers the debt to be too dangerous for many investors, giving it a B1 rating.

Netflix investors are divided about its overseas expansion — the service is available through North and South America, Denmark, Finland, Ireland, The Netherlands, Norway, Sweden, the UK, France, Switzerland, Austria, Belgium, and Germany, and it will launch in Australia and New Zealand next month. Although it adds to the company’s subscriber base, some question whether the revenues are high enough justify the additional costs.

Hastings said during the Q4 earnings call that Netflix has begun to negotiate global rights for its deals to make it easier to put content out in various territories without having to make separate deals.

At Mipcom in October, COO Ted Sarandos said that the company has “desires to be global” and said Japan “would be a very interesting scale play” because the biggest consumers of Japanese animation — aside from the very strong home market — are America and France, where Netflix conveniently has bases. He made the comments after an interviewer put him in the hot seat on the issue following a chat about Marco Polo, which launched in 50 territories.

The next month, at the fifth annual U.S./China Film Summit in LA, Sarandos said: “There’s no reason we’re not in Asia yet, it is just as we are evolving.” He added that China also is a very complicated market, but it is a large market” that Netflix wants to get into, noting broadband and payment system requirements as factors. “We’ll get there, we’ve got other fish to fry, but we’ll get there.” Sarandos said.

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