Netflix eclipses 50m subscribers as international audiences soar

Nassos Stylianou
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Netflix's international expansion appears to be paying off - certainly in terms of subscriber growth.

The video streaming company has just posted an impressive earnings report for the second quarter, with profits more than doubling in the three months to June. The company's net income rose to $71m, or $1.15 per share, from $29.5m, or $0.49 per share, a year earlier.

In its letter to shareholders, the company reported revenues climbing to $1.34bn from $1.07bn.

But as the chart below shows, Netflix has had to go through a very difficult 2012, when it tapped into domestic earnings to fund international expansion, launching in the UK, Ireland, Denmark, Finland, Norway, Sweden and the Netherlands with higher than anticipated costs.

Probably the most impressive aspect of Netflix's earnings update however is how many subscribers it has added, especially from outside its US base.

The customers to its international movie and TV streaming services surpassed 50m for the first time, fuelled by overseas growth. International subscribers increased by 1.1m in the three months from April to June, more than the 940,000 overseas users it had expected to add in the second quarter. Its US subscribers increased by 570,000 compared to the 520,000 it had forecast.

The company ended the quarter with 36.2 million members in the US, up from 29.8 million a year ago, and 13.8 million overseas, up from 7.8 million a year ago. Netflix's expected to follow up its 2012 expansion by launching in Germany, France, Austria, Switzerland, Belgium, and Luxembourg in September this year.

Analysts with Morgan Stanley anticipate that the number of international subscribers will exceed 52m by 2020, a figure that will account for almost half the company's streaming business. As the Financial Times highlights in this chart, Netflix's international losses have narrowed every quarter since the last three month period of 2013 and were just $15m this quarter, so its earnings are certainly catching up.

In its letter, the company said it has original series in production around the world, something that reflects the growing global nature of the brand, as it attempts to follow up on the hugely successful in-house produced House of Cards and Orange is the New Black.

In 2013, Netflix made history, winning three Emmy awards for the critically-acclaimed House of Cards featuring Kevin Spacey, becoming the first company to win the awards for online-only shows.

With shares in the video streaming company up 70 per cent in the last year, hitting an all-time high earlier this month, with more results like that the only way is up for Netflix.

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