Netflix Inc. is one of the largest the mail-order and online film-movie and television show rental service providers in the U.S. and Canada, with over 25 million subscribers. While the business and its $16-a-month fees' sustainability was previously questioned, Netflix is now not only for people too lazy to go to video rental stores but is now the preferred of choice for millions. Video rental chain Blockbuster, on the other hand, succumbed to bankruptcy, and almost half of its 3,300 stores will be closed.

Early this month, U.S.-based Netflix announced it would be launching in Latin America as its second international market (Canada was the first) later this year. Consumers in 43 countries across Mexico, South America and the Caribbean will soon be able to enjoy unlimited TV shows and movies streamed instantly over the Internet to their TVs and computers.

"As we said last quarter, we intend to launch our third international market in Q1 2012. Depending on content licensing discussions underway, we may launch one or more new countries in Q1," Netflix said in its letter to shareholders Monday.

According to reports, Netflix's third international market will likely be Europe, Asia, and/or Australia.

Netflix is talking with ISPs about a possible launch over the next year, The Australian has reported. Sources told The Australian that in n some instances, potential partners were told Netflix hoped to begin operations in the next 12 to 18 months. A launch next year could coincide with the roll-out of the National Broadband Network.

Netflix will expand into the European market, starting in Spain by 2012, French daily Le Figaro reported on its website, without citing anyone. Netflix is also interested in the U.K. and France, and may enter those markets at the end of 2012 or the start of 2013, Le Figaro added.

Netflix said that it has raised its global subscriber base (Canada and US) to 25.56 million, up from 23.6 million the three months before. Netflix has gained nearly 1 million subscribers in Canada just 10 months after its launch.

Portolio

Netflix has thousands of DVD titles in its portfolio.

In the second quarter alone, Netflix reached agreements with Miramax and Revolution Studios to add several hundred movies on a rotating basis, giving our subscribers access to critically acclaimed films such as "Pulp Fiction," "Good Will Hunting," "Black Hawk Down," "Across the Universe," and "Shakespeare in Love" as well as box office favorites like "Daddy Day Care," "Hellboy," and "Anger Management."

In Q2, Netflix also added thousands of TV episodes through significant multi-year renewals with Viacom's media networks and NBC Universal.

In the case of NBCU, Netflix secured access to great NBC primetime hits on a prior-season basis, including "30 Rock," "Parenthood," and "The Office." Complete previous seasons of cable favorites like SyFy's "Warehouse 13," USA's "Psych," and E's "Keeping Up with the Kardashians" are also part of the deal. With Viacom, Netflix expanded its agreement to include a wide range of programming from MTV, Nickelodeon, Comedy Central, BET and TV Land, including complete seasons of "Jersey Shore," "SpongeBob SquarePants," "South Park," "Hot in Cleveland," and "Basketball Wives."

Netflix subscribers now have access to a wide range of programming from all four major U.S. broadcast networks and from nearly every major cable channel, as well as thousands of films, including those in their first subscription window, from Paramount, MGM, Disney, Lionsgate and a host of mini-major and independent studios.

Pricing

Netflix announced early this month that it is separating unlimited DVDs by mail and unlimited streaming into separate plans to better reflect the costs of each and to give our members a choice: a streaming only plan, a DVD only plan or the option to subscribe to both. With this change, it is no longer offering a plan that includes both unlimited streaming and DVDs by mail.

So for instance, its current US$9.99 a month membership for unlimited streaming and unlimited DVDs will be split into 2 distinct plans:

Plan 1: Unlimited Streaming (no DVDs) for US$7.99 a month
Plan 2: Unlimited DVDs, 1 out at-a-time (no streaming), for US$7.99 a month.

The price for getting both of these plans will be US$15.98 a month (US$7.99 + US$7.99).

The recent 60% pricing increase has upset subscribers in the U.S. "Some subscribers will cancel Netflix or downgrade their Netflix plans," Netflix acknowledged in its shareholder letter. "We hate making our subscribers upset with us, but we feel like we provide a fantastic service and we're working hard to further improve the quality and range of our streaming content in Q4 and beyond."

Competition

Netflix said its largest competitor over time is likely to be an improved MVPD service offering more Internet video on-demand (via DishOnline.com or HBO GO app), and thus reducing the number of people who will be attracted by a supplementary service like Netflix. Over time, both the DishOnline application and the HBO GO application, amongst others, will likely get built into smart TVs or be available in smart TV app stores, Netflix said. "While HBO GO and Netflix do not have overlapping content, and many consumers subscribe to both Netflix and HBO, we do compete with HBO for studio content and for viewers' time. Our task is to consistently improve the quality of our service and stay two steps ahead, so that consumers will continue to enjoy Netflix," Netflix stated.

Netflix also acknowledged that Hulu Plus added about 325,000 subs in Q2; we added close to 2 million. Netflix noted that it invests much more than Hulu Plus in content, in marketing, and in R&D. Netflix said it isn't planning to bid on Hulu, which is being sold, because most of its revenue is from providing free ad-supported streaming of current season TV shows, which is not Netflix's focus.

Amazon recently added thousands of films and TV shows, and includes them as a free service to subscribers of its Prime shipping service. "We have vastly more streaming content, are available on more streaming devices and are purely focused on subscription video streaming. So far, we haven't detected an impact on our business from Amazon Prime," Netflix said.

In Australia, Netflix's entry will cause ripples among internet television (IPTV) players such as Telstra's T-Box, Foxtel and FetchTV, according to The Australian. In FetchTV's partner Internode, customers pay $399 for the FetchTV set-top box and a subscription that starts at $5.95. Its premium FetchTV package includes 30 movies per month.

A direct competitor in the region would be Quickflix Limited, an online movie subscription in Australia. Quickflix has 42,000 movies and television titles in its portfolio and has more than 70,000 subscribers.

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