Netflix hints at Canadian expansion success

Netflix won't talk about how many subscribers it has in Canada, but the U.S. company says its international expansion plans for 2011 give strong hints as to how the north-of-the-border launch has gone.

Netflix won't talk about how many subscribers it has in Canada, but the U.S. company says its international expansion plans for 2011 give strong hints as to how the north-of-the-border launch has gone.

"After a short period in Canada we're now talking about other regions in the world, so that's a good indicator," Netflix spokesman Steve Swasey said in a recent interview.

Netflix, which launched in Canada in September, is already planning more international expansion. ((Paul Sakuma/Associated Press))

"We're extremely pleased with the reception in Canada and … based on the early success of we're going to continue our international expansion next year and we're going to allocate significant dollars to it."

CEO Reed Hastings revealed during a recent event that is on track to be profitable by the time its first anniversary rolls around in September, "which is a very fast break-even," he said.

Although many consumers continue to gripe about the content selection on Netflix and the lack of newer titles to view, Swasey said customers are appreciating what's available and generally aren't cancelling their subscriptions in frustration.

"You'll see in the blogosphere and in chatrooms people saying, 'Yeah, but where's my Avatar or It's Complicated. So we've had to do a little bit of resetting of expectations," he said.   

"There's a cross section of people that I think were expecting it to be all new releases and they were disappointed but … it hasn't hampered retention or acquisition of members, those who have come on and complained about it stayed on because there's a treasure trove of stuff to watch — even though it's not a lot of new releases."

Swasey wouldn't tip his hand as to what content the company hopes to acquire in 2011, saying only that new movies and TV shows will be added all the time and more devices will be supported. Because there seems to be a lot of concern about selection, Netflix says it is going to work harder at promoting new additions to the catalogue.

"The one lesson learned in Canada, because we're new and because there was that one little complaint about new releases, is we're going to be very proactive in announcing when we have new titles … we're going to be more focused on specific titles as we announce them in Canada," he said.

However, a couple of features that customers have been requesting online aren't on the way.

There's currently no way to build a queue of movies to watch in the future and Netflix has no plans to implement one.

'Strategic decision'

"It sounds really easy and it sounds like we should just do that but the engineering and the technical resources required to do that on a streaming service are enormous," Swasey said.

"It's about resource allocation and it's a strategic decision we've made."

While Facebook and Twitter are growing more popular every day, Netflix actually did away with a social networking feature in the U.S. that allowed users to share their viewing habits with one another.

"That was a feature we had for years and years and years and almost nobody used it. We marketed it, we pushed it, we promoted it and it just didn't resonate," Swasey said.

"Again, we run lean and efficient at Netflix — we have about 600 salaried employees running a $2-billion company — so we have to marshal resources and make tough decisions. When we look where to invest time and energy and engineering resources we decided that social networking on Netflix was not an area we were going to pursue."

Netflix is also keeping an eye on how bandwidth caps in Canada are affecting usage and whether they'll become a hindrance in using the service.

"We're hearing from people who really consumed a lot and then saw a surprise on their bill but it hasn't been prevalent, we haven't seen it being a conquering issue," Swasey said.

"We're not commenting about lobbying (internet service providers) or anything like that, we're just seeing how it shakes out and how it performs over time and what the effect is on consumers. So it's really too early to tell."