Netflix prepares to launch in Great Britain, Spain in 2012

Netflix is gearing up to launch in Spain and Great Britain in the first half of 2012 and is exploring several other countries in Europe and Asia for later debuts, according to people briefed on the matter.

Chief Executive Reed Hastings has named international expansion as a key driver for Netflix’s growth in the coming years. Though the company’s 25-million subscriber base has been growing rapidly in the U.S. and Canada, that’s expected to slow, particularly in light of a recent 60% price increase for people who watch video online and get DVDs through the mail. The increase outraged some customers.

Last year, the company launched its Internet-streaming service in Canada, and in July it announced it would go into 43 Latin American countries by the end of 2011.

Now Netflix is talking to studios about acquiring content rights to move into Spain and Britain in the first half of 2012. Though a move into Britain was previously expected, Spain will pose a unique challenge because piracy is rampant and unemployment is more than 20%, the highest in Europe. DVD sales are very low in the country, and there is no real digital download business. Apple Inc.’s iTunes Store doesn’t sell movies and TV shows in Spain.

The Spanish rollout will be a test of whether people used to watching movies at home for free will pay about $8 a month for content that’s typically higher quality and easier to find than on piracy websites.

Netflix is negotiating with Hollywood studios to acquire digital rights to stream content in Spain. In addition, the president of a Spanish producers association told ScreenDaily that the company has been in talks with local content makers as well.

With Britain and Spain on the agenda for the first half of 2012, Netflix is exploring other countries to move into later. Among those it has been analyzing, but is not yet committed to launch in, are South Korea, the Netherlands, Belgium, Luxembourg, and the Scandinavian nations, said people familiar with the situation who were not authorized to speak on the record.

A Netflix spokesman declined to comment.

As it examines new foreign markets, Netflix is seeking countries with high broadband Internet participation rates and popular content that is available to be licensed and not locked up in exclusive contracts with other distributors, the people close to the matter said.

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