Netflix Is Now A Truly International Player
In light of MIDiA Research’s Q4 2017 Brand tracker survey data, which revealed that Netflix penetration in the US has reached 49%, Netflix has to look outside the US for future growth.
Why is international growth imperative for Netflix?
Although a 6% surge in its international subscribers may appear modest, when overall YoY international subscriber growth rate is taken into account, this increase has been spectacular indeed. Netflix added a net 16.54 million international paid subscribers in 2017, which translates to a 40.4% rise. This compares to a lower 10.2% growth for US paid subscribers in 2017.
Fortunately, this impressive international expansion allows Netflix to relieve some of the immense pressure it is coming under as a public company. Its market capitalisation at $98.5 billion is 8.4 times its 2017 revenue of $11.7 billion. Or, to put it another way, Netflix would need to perform as well as it did last year for the next 8.4 years to generate enough revenue to match its current stock market valuation. 8.4 years is a lifetime in the digital economy—just think that 8.4 years ago Netflix was mainly generating its income from DVD rentals. This decade has seen both Netflix and Spotify rise to the fore as the global streaming stars of the digital economy. With the YoY subscriber increase in the US at 10.2%, there is minimal growth left for Netflix in the US. Hence the need to double down on international expansion.
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International revenue growth is now outperforming domestic revenue growth
The other big take away from yesterday’s numbers is that international subscriber revenue growth is now out performing domestic revenue growth by 2.7 times, with 2016 international subscriber figures up 58.5% in 2017. Therefore, in the two years since Netflix CEO Reed Hastings announced at CES 2016 that Netflix was at the time available in 190 countries, Netflix has now turned that forward-thinking vision into a tangible reality.
For a deep dive into the Netflix numbers take a look at MIDiA Research’s data sets on Fuse.