Netflix (NFLX) offers its streaming movie and television service in more than 190 countries. However, the content you watch at home is not always available when travelling between countries. There are several reasons why your favorite show might not be viewable when crossing borders.
Why There Are Different Shows Available in Each Country
Hollywood movie and television studios invest millions into each movie and show they make, and costs can vary widely. While independent studios churn out films for only tens of thousands of dollars, big blockbusters can cost hundreds of millions to produce and market. At the top of the list, with an estimated budget of $400 million, is Avengers: Endgame from Disney (DIS).
With so much money at stake each time a film is created, the studios do their best to strictly enforce copyright and earn as much as possible for their investments.
Studios have always sought to earn big sales at the box office, but the life of a movie after it leaves the theaters has changed dramatically over the last decade. Piracy used to only be a small problem, as it took a lot of work to replicate VHS tapes and re-sell them on the black market. But with the rise of the Internet, digital piracy and the shift from physical tapes and DVDs to online streaming has taken a toll on studio profits.
Studios have adapted by offering movies for sale through outlets including Apple’s (AAPL) iTunes Store and Amazon.com (AMZN). As Netflix has shifted from a DVD by mail service to a streaming service, their budget for digital content has increased and become an important revenue source for the studios. Netflix had $14 billion in licensed content on its balance sheet as 2018, up from $11.8 billion in 2017.
Studios enforce copyright by country, as different markets have different demands for specific content. For example, a movie that was very popular in the United States might be uninteresting in Brazil, and a hit British comedy might not be so funny to American audiences.
Netflix and the studios both understand this, and the studios charge more for Netflix to offer the streaming of specific titles in some countries compared to others. Because the content deals are country-specific, Netflix may choose to pay the studio-demanded price to stream a title in one country, while negotiations in other regions fall flat.
Why Netflix Does Not Work When You Travel
The same rules that govern which countries have access to specific content apply to global travelers. To avoid conflict with their studio partners, Netflix filters what you can see when you travel to another country. You can access that country’s Netflix library, which may differ from what you can watch at home. There are nearly 4,000 movie titles available for viewing in the U.S. But if you travel to Italy for vacation, you would have access to roughly 2,500 titles.
The Bottom Line
Just as Netflix is in the business of streaming video to its users around the world, the studios are in the business of earning profits on their content. With current copyright laws and agreements, Netflix negotiates with each studio to arrange specific agreements to stream titles in each territory.
Netflix now reaches more than 167 million paid subscribes globally, with 100 million of that coming from outside of the U.S. Being able to offer content unfettered by geographic restrictions will play an important part in attracting and retaining new subscribers. To this end, Netflix is ramping up original content production. It had $6 billion in original content assets as of 2018, up from $2.9 billion the year before.