International subscriber outlook
Strong local content targeting international subscribers across various geographies has helped Netflix (NFLX) maintain strong customer growth outside the United States. In 4Q17, the company aims to gain 5.1 million subscribers against 4.5 million added in the previous quarter.
For fiscal 2017, Netflix has estimated 61.5 million subscribers against 44.4 million in 2016, with an annual growth of 25%. It expects to add 17.1 million members in fiscal 2017 compared to 14.3 million in 2016.
From the graph above, we can see the strong international subscriber growth in the last five quarters. During that period, total international membership rose at a CAGR (compound annual growth rate) of 9.5%. If the company is able to achieve its target for 2017, then the average quarterly subscriber addition to the video streaming leader will be 4 million in 2017 against 3.6 million in 2016.
Strong content to drive growth
In 3Q17, Netflix easily outpaced its guidance of adding 3.7 million international subscribers. The growing popularity of original content such as Narcos, The Defenders, and Stranger Things could allow the company to surpass its outlook again. Newly launched TV series in 2017, including Mindhunter and Ozark, could further drive subscriber growth in 2017 and beyond.
The company is also gaining traction in non-English-speaking countries such as Germany by launching the hit TV series Dark. Netflix is also targeting highly populated Asian countries such as India and South Korea by releasing Sacred Games and Kingdom, respectively.
The launch of new original shows could help Netflix achieve strong international subscriber growth. It could also help it stay ahead of Amazon Prime Video (AMZN), which is also aiming at international growth.