Netflix accelerates global push as US growth slows
Revenues rises as streaming video service eyes expansion into other regions
Netflix said it will increase the percentage of content spending devoted to original series such as Orange Is the New Black and House of Cards
Streaming video service Netflix said it will complete its expansion into 200 countries within two years, faster than expected, as the company builds its presence overseas while growth in the United States slows.
Netflix said it added 4.3 million subscribers in the quarter that ended in December, beating its own guidance thanks to higher-than-expected interest overseas. Investors welcomed the news, sending shares up 15 per cent in after-hours trading.
In the United States, Netflix pulled in 1.9 million streaming customers, down from 2.3 million additions a year earlier, and forecast signing up 1.8 million more in the current quarter.
Netflix believes the slowdown is “a natural progression in our large US market as we grow,” the group said in a quarterly letter to shareholders.
In international markets, however, “progress has been so strong that we now believe we can complete our global expansion over the next two years, while staying profitable, which is earlier than we expected,” it said.
Netflix added 2.4 million customers in its roughly 50 international markets, bringing its global total to 57.4 million worldwide.
New markets will include a “modest investment” in China, chief executive Reed Hastings said on a conference call. Netflix needs a license to operate in the country, and “it’s not 100 per cent clear we’ll be able to do that,” he said.
Netflix also said it will increase the percentage of content spending devoted to original series such as Orange Is the New Black and House of Cards, and will finance the expansion with long-term debt. The company is investing in original shows as it faces competition from Time Warner’s HBO, Amazon. com and Hulu, as well as on-demand offerings from pay TV providers.
For the quarter that ended in December, net income rose to $83.4 million, or $1.35 per share, from $48.4 million, or 79 cents per share, a year earlier.
Revenue rose to $1.48 billion from $1.18 billion.
Netflix shares rose 15.7 percent to $403.44 in after-hours trading.