In 2015, Netflix reported a 50% drop in profits compared to the same time the year before but was seeing an increase in international subscriptions. On the other hand, the international customers were not incredibly happy. International expansion was an important effort meant to offset the slumping domestic sales.

Netflix built its business model, after leaving its DVD services behind, by licensing content for distribution on its streaming platform and creating original content, including movies, scripted programs, and reality shows. Competitors such as Hulu created platforms with similar offerings, competing for licensed material which limited Netflix's offerings. After watching and capitalizing on the decline of Blockbuster, Netflix's executives understood that not growing with the market could mean financial ruin for the company.

For these reasons, Netflix began an international expansion in 2010 that resulted in the company's entry into 200 countries by 2016. Though the company expanded to hundreds of countries, Netflix had used a conservative model that included limited test runs in new markets and generating content based on those smaller audiences preferences. Despite the company's efforts at taking cultural preferences into account, they faced multiple challenges.

International challenges for Netflix included regulatory restrictions of both the United States and countries in which they were expanding. While US regulations limited the countries to which Netflix could expand as a US-based company, the countries Netflix expanded to had regulations that limited content through censorship among other reasons. Furthermore, Netflix had a difficult time adapting to local tastes. For example, Netflix only offered content in 20 different languages in almost 200 countries. There was also a lot of competition in these countries from companies that already catered to the local tastes.

Finally, cost was a serious challenge. Netflix sunk millions of dollars into expansion for items such as global licensing fees, broadband internet in underdeveloped areas, and partnerships with local content makers. By 2015, Netflix report a $68 million loss for the international business segment. The ambition of Netflix's plan caused an immediate drop in profit, which worried stakeholders who were seeing a net loss in domestic profit as well.

With so much cost sunk in the international expansion efforts, Netflix had a lot to lose. Thus, they must figure out a way to make the international expansion profitable.

Write a case analysis for Netflix describing the best long-term plan of action for a profitable international expansion.