Netflix grew its international member base by 78% year-on-year in Q2 and has outlined plans to “further invest aggressively in global expansion.”
Announcing its second quarter results, Netflix said that its international user base stood at 13.8 million, and its total number of users – including the US – was 50.05 million.
Confirming that its next set of launches – in Germany, France, Austria, Switzerland, Belgium, and Luxembourg – would come in September of this year, CEO Reed Hastings and CFO David Wells said this would “significantly increase” its European footing.
“This launch into markets with over 60 million broadband households will significantly increase our European presence and raise our current international addressable market to over 180 million broadband households, or twice the number of current US broadband households,” the executives said in a letter to shareholders.
Hastings and Wells added that this would not be the end of their international expansion efforts: “Even after our upcoming expansion in Europe, we’ll only address about one-third (271 million of 728 million) of current global broadband households, providing a great opportunity to build on our international success beyond 2014.”
“Our broad success from Argentina to Finland has convinced us to further invest aggressively in global expansion.”
Internationally, Netflix made a loss of US$15.3 million in its international markets during Q2 and, with the next set of launches, it expects this to widen to US$42 million in Q3. However, overall Netflix said it is “rapidly approaching contribution profitability” in its international markets, and is seeing improvements “across all existing markets.”
Overall in the quarter, Netflix made total streaming revenues of US$1.15 billion and contribution profit of US$212 million.
In terms of content, Netflix attributed the growth of its US member base, which reached 36.2 million to the strength of its “ever-improving content offering,” including season two of original Netflix series, Orange is the New Black, which was singled out by analysts as a key retention factor.
“Undoubtedly the timing of the second season for the Emmy nominated series Orange is the New Black (pictured), which came out in Netflix’s second quarter, has helped maintain subscriber loyalty here, as well as the popularity of established favourites such as House of Cards,” said Joshua Raymond, chief marketing officer for Cityindex.co.uk.
Speaking on the company’s earnings call, Hastings said that Netflix was also “looking to do some investments in France with production” for content that would travel internationally.
Chief content officer Ted Sarandos added that the content breakdown for the service in France and Germany would be roughly 10% to 20% local, with the rest “mostly Hollywood product that people want to see around world”.