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Netflix Stock Rose amid Robust Growth in APAC and EMEA

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On Monday, Netflix (NFLX) released its region-wise subscriber and revenue count for the first time since 2017 in an official filing. Until now, Netflix would only declare its subscriber and revenue count in two segments—domestic and international. During the third-quarter earnings release, the company announced that it would disclose its subscriber count by region from January 2020. However, it was a surprise that the company declared the numbers by the end of the year.

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In terms of revenues for fiscal 2018, the EMEA (Europe, the Middle East, and Africa) region posted a 68% YoY (year-over-year) surge—the maximum compared to other areas. The APAC (Asia-Pacific) region followed EMEA with 64% YoY growth, while Latin America’s revenues rose 36% YoY. Notably, the UCAN (US and Canada) region was the lowest with a 24% YoY revenue increase.

For fiscal 2019, the figures are available up to the September quarter. The UCAN region saw 25% YoY growth, while the EMEA region’s revenues rose 42% YoY. The revenues in the Latin America region rose 32% YoY. For the third quarter, Netflix saw a maximum revenue surge in the APAC region with a 54% YoY growth.

Maximum subscriber additions since 2017

Netflix added 6.8 million subscribers in the September quarter this year with maximum growth in the EMEA and APAC regions again. In the UCAN region, the company’s ability to gain new paid members is declining. From 1.6 million in the third quarter of fiscal 2017, the company’s new subscriber count fell to 613,000 in the third quarter of fiscal 2019. The EMEA region has 58% growth in subscriber additions since September 2017. Meanwhile, the APAC region stole the show with a 162% surge in its new subscriber count in the third quarter of 2019.

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The average monthly subscription fee for the EMEA, Latin America, and APAC regions fell in the May quarter compared to the same period in 2018. However, UCAN saw a 12% YoY rise in the subscription fee, which led to subscriber losses during that period. While EMEA has shown excellent new subscriber additions, its average monthly subscription fee is higher than Latin America or APAC. At $10.40 per month in the third quarter, the EMEA region is second to UCAN’s subscription fee.

At the end of the September quarter, Netflix has about 158 million subscribers—67.1 million are domestic. The company’s international subscriber count was over 90 million with 47.3 million in the EMEA region and 29.3 million in Latin America. APAC’s total subscriber count was 14.48 million in the third quarter.

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Netflix’s international growth

At this point, Netflix’s two progress nodes are the EMEA and APAC regions. The company has been successful in Europe with the Spanish show La Casa de Papel (Money Heist) and the German show Dark. In India, Netflix has been successful due to its strategic pricing and unique shows like Sacred Games, Ghoul, and Love per Square Foot.

In May 2018, Netflix announced an investment of 1 billion euros to produce local content in France, the UK, and Germany, according to a report from Television Business International. The investment was part of Netflix’s commitment to create 30% regional content, as directed by the European Commission. In 2018, the company had nearly 100 titles that originated in the EMEA region—double what it produced in 2017.

Netflix also adopted the same strategy for APAC. The company is growing its investment in local content in South Korea and Japan. Notably, the company is investing in content surrounding Korean Drama. Netflix is also partnering with local production houses. In India, Netflix is betting big on regional content and partnering with dominant telecommunication companies to widen its reach.

The company’s mobile-only subscription plan in India launched in July. Last week, Livemint reported that Netflix is considering long-term and cheaper subscription plans in India with up to a 50% discount. The company also launched mobile-only subscription plans in Malaysia as well.

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In international markets, Netflix has partnerships with pay-TV providers, which help its growth. In Europe, the company joined forces with partners like Canal+ in France and Sky Italia. Meanwhile, in Spain, the company has a deep presence through pay-TV. However, Netflix hasn’t explored more pay-TV partnerships in APAC and South America yet.

Netflix’s Q4 results in January

The streaming war is on fire with the entry of Apple TV+ (AAPL) and Disney+ (DIS). With more entrants lined up in 2020, Netflix has enormous challenges ahead. By releasing these crucial figures, the company showed investors where its real strength lies.

We’re looking forward to Netflix’s fourth-quarter earnings in January for more insights on its growth trajectory.

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