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Canada, U.K. Still Drive Netflix Foreign Markets

20 Apr, 2015 By: Erik Gruenwedel

Netflix wants to be in 200 countries by the end of 2016. But the subscription streaming pioneer still generates the majority of foreign revenue from Canada and the United Kingdom — the first and third regions it launched internationally in 2010 and 2012, respectively.

Netflix international paid subscribers totaled 19.3 million at the end of the first quarter (ended March 31). Netflix Canada continues to have the distinction of being the SVOD service’s largest and only profitable foreign operation with about 30% penetration of broadband homes, according to SNL Kagan. The U.K. is a close second, while Brazil had the third-largest subscriber base and was the leader in Latin America.

Kagan said year-over-year growth at the end of 2014 was strongest in the Netherlands, which launched late in the third quarter of 2013. Growth tends to be greater in the earliest few months after launch, although Latin America, where Netflix launched services in 2011, had some pretty significant improvements from 2013 to 2014.

Since the service launched in international markets during 2010, Netflix's percentage of subscribers outside of the U.S. has grown from 1.9% of overall subs to nearly 48% through Q1. That said, the international division remains unprofitable, losing $159.8 million in 2014 and $65 million the first three months of the year. It projects to lose $101 million in Q2 and the rest of the year as expansion continues into Japan and elsewhere.

“That is an improvement over a 2013 loss of $274.3 million,” Kagan wrote in an April 20 note. Netflix estimates the international division will be profitable by 2017.

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