Video streaming service Netflix is expanding rapidly around the globe. It is currently available in 50 countries with the goal of expanding to 200 countries by the end of 2016. Netflix’s international slogan is “Have content, will travel.” There are challenges to international expansion for this type of service, such as inadequate disposable household income and a low percentage of households with high-speed internet needed to stream videos. And even though almost half of France’s TV-owning households have internet-connected TVs, cultural restrictions limit Englishlanguage program content, requiring Netflix to invest in local content for French customers. The next countries to get Netflix are Italy, Spain, and Portugal. Similar to Netflix’s other European offerings, service will be offered at a price of €7.99 per month, which converts to U.S. $8.97 during the time of expansion. Refer to Appendix 2, Marketing by the Numbers, to calculate the annual market sales potential for Spain in euros and U.S. dollars. There are 18,217,300 television households in Spain, with 75 percent having high-speed internet. Assume 50 percent of the households are willing and able to purchase the service and would purchase one subscription at an average price of €7.99 per month ($8.97). Calculate the market sales potential using the current exchange rate between euros and U.S. dollars (see www.xe.com/currencyconverter/). Is the dollar currently strong or weak compared to the euro? Why are U.S.-based international companies concerned when the U.S. dollar is strong compared to other currencies?
Video streaming service Netflix is expanding rapidly around the globe. It is currently available in 50 countries with the goal of expanding to 200 countries by the end of 2016. Netflix’s international slogan is “Have content, will travel.” There are challenges to international expansion for this type of service, such as inadequate disposable household income and a low percentage of households with high-speed internet needed to stream videos. And even though almost half of France’s TV-owning households have internet-connected TVs, cultural restrictions limit Englishlanguage program content, requiring Netflix to invest in local content for French customers. The next countries to get Netflix are Italy, Spain, and Portugal. Similar to Netflix’s other European offerings, service will be offered at a price of €7.99 per month, which converts to U.S. $8.97 during the time of expansion.
Refer to Appendix 2, Marketing by the Numbers, to calculate the annual market sales potential for Spain in euros and U.S. dollars. There are 18,217,300 television households in Spain, with 75 percent having high-speed internet. Assume 50 percent of the households are willing and able to purchase the service and would purchase one subscription at an average price of €7.99 per month ($8.97).
Calculate the market sales potential using the current exchange rate between euros and U.S. dollars (see www.xe.com/currencyconverter/). Is the dollar currently strong or weak compared to the euro? Why are U.S.-based international companies concerned when the U.S. dollar is strong compared to other currencies?
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