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Netflix: Key Growth Drivers in International Markets

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Netflix’s streaming business in international markets

In fiscal 2Q17, Netflix (NFLX) recorded international streaming revenues of $1.1 billion, up 54% year-over-year. Netflix’s total international streaming revenues of $1.1 billion made up 44% of the company’s total streaming revenues of $2.6 billion in fiscal 2Q17, which indicates that international territories are increasingly becoming an important source of revenues for Netflix.

Netflix’s contribution losses also further narrowed down in fiscal 2Q17 to $13 million. As a result, the company expects to be profitable internationally in fiscal 3Q17, with a contribution profit of $30 million.

Netflix’s international members now comprise around 50% of its total subscriber base. The company’s international ASP (average selling price) rose 10% year-over-year, excluding the impact of currency fluctuations.

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Netflix’s outlook for the rest of the year

The company expects international net additions of 3.6 million subscribers in fiscal 3Q17. This optimism in its net additions stems from Netflix’s emphasis on content that’s proving to be extremely popular in international territories. Considering the strong growth of Netflix’s international subscribers, the company expects to turn profitable internationally this year, at the current exchange rates.

We’ll discuss Netflix’s content strategy in detail in the next part of this series.

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