Netflix’s Global Expansion Continues in 2016

Netflix expands to 190 countries

According to a Wall Street Journal report on January 6, 2016, Netflix (NFLX) stated at the International Consumer Electronics Show in Las Vegas that it had expanded into an additional 130 countries around the world, now reaching a total of 190 countries. Currently, Netflix is not available in North Korea or Syria, as the US government has restrictions regarding American companies operating in these countries. Netflix is still not available in China (FXI) but continues to explore options to provide its service in that country.

Netflix’s Global Expansion Continues in 2016

The company expects to increase its international streaming memberships significantly as it forays into international markets. As the graph above shows and according to the company’s internal forecasts, Netflix expects total memberships in its international streaming segment to reach 29.5 million in 4Q15. This is a steep increase of 61.2% over the total international streaming memberships of ~18.3 million in 4Q14.

Netflix’s operating losses on the rise

Rapid international expansion has meant that Netflix’s operating losses are also on the rise. Netflix expects operating losses of $117 million in 4Q15. It expects its operating losses to widen as it expands into more international markets. Netflix has stated that its international streaming segment is expected to break even in 2016 and turn profitable after 2016.

Netflix’s competition is also increasing with Amazon’s Prime Instant Video service (AMZN), which is expanding into international markets. We’ll explore factors that could affect Netflix’s international expansion in detail in the next part of this series.

Netflix makes up 0.97% of the PowerShares QQQ Trust Series 1 ETF (QQQ). QQQ also holds 8.9% of Microsoft (MSFT) and 4.6% of Facebook (FB). For an investor interested in exposure to the television and radio sector, QQQ has an exposure of 4.5% to the sector.