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Buoyed by its success in international net additions and shrinking contribution losses, Internet entertainment streaming service Netflix has announced plans for what it describes as “a substantial European expansion”.
It made the comments in a letter to shareholders as it revealed its Fourth-Quarter 2013 Financial Results. The company said it ended 2013 with over 44 million members, recording higher domestic net additions than in 2012, growing international success, and an impressive first slate of original series. It expects to end Q1 2014 with 48 million members.
Domestic net additions in Q4 of 2.33 million were 14 per cent higher than prior year Q4 at 2.05 million. Netflix said its “healthy” y/y growth in net additions was likely fuelled by its service improvements, marketing effectiveness, and sales of Internet connected devices.
Netflix said it was making “great progress” internationally, with strong member growth and contribution profit/loss improving sequentially in all of its markets (with the exception of the Netherlands as it had its first full quarter of operations and thus loss in Q4). It saw growth in net additions of 1.74 million in Q4 to end the year at 10.93 million members, slightly above its guidance. As anticipated, Q4 net additions were down slightly from the prior year Q4, as it launched four Nordic markets in Q4 2012 versus the relatively smaller Netherlands launch in Q3 2013.
In Q1 of 2014, Netflix is forecasting an almost 60 per cent increase in net additions from the prior year, from 1.02 million to 1.60 million. “We’ve seen increases in consumer brand awareness and likelihood to recommend across markets as our content offering builds and marketing messages are honed, factors that help drive the y/y growth in net additions,” it said.
“We plan later this year to embark on a substantial European expansion. Our success this year in international net additions and shrinking contribution losses confirms our belief that there is a big international opportunity for Netflix,” it said.