Netflix Jumps the Gun in Sweden

When Netflix (NAS: NFLX) announced its plans to expand into Scandinavia, the goal was simply to open up shop by "the end of 2012." With more than two months to go until popping the year-end champagne, the video maven got a jump on its new market.

The streaming video service kicked off in Sweden today, with Norway, Denmark, and Finland slated for debuts later this week. The company has been making local content deals and setting up the back-end infrastructure over the last six months, and managed to launch well before the holiday season.

Netflix will get promotional assistance from Stockholm-based music subscription service Spotify, and will advertise Spotify's services stateside in return. That's a natural pairing if I ever saw one. I can imagine the marketing messages now:

  • "Try Netflix -- the Spotify of movies!"

  • "Try Spotify -- the Netflix of music!"

The Netflix service is going up against some heavy hitters. (NAS: AMZN) bought its way into digital movie services in Scandinavia and Time Warner (NYS: TWX) has announced a digital HBO service here that doesn't require a subscription to the premium cable channel. Moreover, Sweden is home to the infamous piracy site, The Pirate Bay, as well as numerous homegrown media services. This will be a litmus test of the Netflix value proposition. If the company can succeed against all these headwinds, it should be smooth sailing in less competitive markets.

It's good to see Netflix delivering on its promises, ahead of schedule. The company reports earnings next week, giving us an opportunity to find out whether the Nordic project runs over or under budget.

And on that note, Netflix slipped in a couple of useful data points for curious investors. Swedes were invited to join "almost 30 million" existing subscribers. That would put subscriber counts near the top end of management's guidance for the quarter. As a reminder, the global third-quarter subscriber target ranges from 28.8 million to 30.1 million total subscribers.

The market is taking in the news with a yawn, and Netflix shares still trade at a 50% discount to 52-week highs.

While the company's first-mover status is often viewed as a competitive advantage, the opportunities in streaming media have brought some new deep-pocketed rivals looking for their piece of a growing pie. Can Netflix fend off this burgeoning competition, and will its international growth aspirations really pay off? These kinds of issues are must-knows for investors, which is why we've released a brand-new premium report on Netflix. Inside, you'll learn about the key opportunities and risks facing the company, as well as reasons to both buy and sell the stock. We're also offering a full year of updates as key news hits, so make sure to click here and claim a copy today.

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