Netflix-Canada-SJULY 18, 2010 • Netflix announced it was expanding into Canada this fall with a streaming-only movie service. Unlimited movies and TV episodes streamed instantly to TVs and computers will be offered for one monthly fee. The Canadian launch marks the first availability of Netflix outside the United States, and is the first streaming-only service promoted by Netflix. English support will be available at launch with the French language to be added later. In related news, Netflix chief executive Reed Hastings said the company should have a streaming service on the PS3, without need of a disc, by October.

Impact: Canada will be an excellent test case for Netflix’s ambition to become an all-streaming distributor of digital entertainment. As DVDs and Blu-ray discs will not disappear anytime soon, this online video retailer will not be able to abandon its original disc distribution business in the U.S. anytime soon. Yet Netflix can leverage its excellent reputation to take advantage of the penetration of broadband Internet connections worldwide. We think French language support will be the key hurdle for the company. If successful, Spanish localization should be next, and that would open up Latin America – a very important market for Hollywood entertainment.