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What’s on the Horizon for Netflix Internationally in 2019?

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Jan. 15 2019, Updated 5:00 p.m. ET

A strong rise in international memberships

Netflix (NFLX) expects total international memberships of 86.2 million and net additions of 7.6 million in the fourth quarter of 2018. It expects its international memberships to increase 37.3% YoY (year-over-year). The company expects its international revenue to rise to $2.1 billion, up 36.7% YoY, and its contribution profit to be $211.0 million.

Now let’s look at why Netflix expects this rise in international memberships.

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Netflix’s content is fueling an increase in its memberships

Netflix is putting a strong emphasis on original content to increase its international memberships. Currently, ~80% of its subscriber growth comes from international markets. This year, the company is ramping up to produce 70 original local-language shows in its international markets.

The focus on local-language original content has meant that there has been a steady rise in the number of hours viewers are streaming Netflix, especially in Asian countries. Other over-the-top players, such as Amazon’s (AMZN) Prime Video and 21st Century Fox’s (FOXA) Hotstar, are also making inroads in Asian countries such as India. At the same time, Netflix’s local-language original content, such as Sacred Games, is also getting a global audience.

ETF discussion

The Invesco QQQ Trust, Series 1 ETF (QQQ) holds 2.05% in Netflix stock. The other major technology stocks QQQ holds include Amazon at 9.9%, Microsoft (MSFT) at 9.67%, and Apple (AAPL) at 8.88%.

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