Netflix’s international streaming business in 4Q15
Netflix (NFLX) expanded its reach outside the United States. It’s now available in 190 countries around the world, but still not China (FXI). Currently, Netflix isn’t available in North Korea or Syria either, as the US government restricts American companies from operating in these countries. Netflix continues to explore options to provide services in China.
Yesterday (January 19), Netflix announced its 4Q15 results. Netflix recorded international streaming revenues of $566 million in 4Q15. As the chart below indicates, Netflix’s contribution losses continued, reaching $109 million in 4Q15. Netflix had total international memberships of 30.0 million in 4Q15 with net additions of 4 million members. The company’s total international memberships and net additions exceeded its internal forecasts of 29.5 million and 3.5 million, respectively.
In 4Q15, Netflix’s “average subscriber price” rose 4% to 5% year-over-year, which excludes the impact of foreign currency exchange rate fluctuations.
Netflix’s initiatives to succeed in international markets
Netflix continues to keep its international pricing closer to its US prices. Netflix’s streaming service in international markets costs from $6 to $19 per month. In the United States, Netflix’s streaming service costs an average $10 per month.
Netflix continues to add “support for Korean, Arabic, and Simplified & Traditional Chinese languages.” The company is “primarily targeting outward‐looking, affluent consumers with international credit cards and smartphones” for its user base in international markets.
Netflix’s outlook in 1Q16
Netflix expects revenues of $653 million in 1Q16 with a contribution loss of $114 million. The company expects total international memberships to reach 34.4 million and net additions of 4.4 million members. The company still expects to be profitable in its international streaming segment from 2017 onwards.