Netflix has had an aggressive start to 2016 by expanding its service to 130 new countries at the beginning of the year and finishing Q1 with over 81 million members. The increased subscriptions were mainly based on the strength of its fast growing slate of original content. Of the total Netflix members, 42 percent are now outside of the US. In the first quarter of 2015, 4.51 million new members have been registered internationally. While in US, 2.23 million new members were added in this quarter against 2.28 million a year ago, suggesting the US market may be reaching its saturation point.
Netflix is currently offered only in English and payment methods are limited primarily to international credit cards. In the coming quarters the company plans to add more local languages, content, payment options and customer support. Though Netflix does not release regional figures, the company informed Arabian Marketer that Netflix is “happy with the response in the MENA region”.
Net additions in Q1 amounted to a record 6.74 million, surpassing 5.59 million in Q4 of 2015 and 4.88 million in the year ago period. However, operating income saw a dip from USD 97 million in the year ago quarter to USD 49 million mainly due to the continuous investment into the international markets. US revenue rose 18 percent year over year, reflecting 14 percent growth in average paid memberships and a 3 percent increase in (average revenue per user) ARPU.
The total profit contributed by US totaled USD 413 million, a 35.5 percent margin compared to 31.7 percent a year ago. International revenue increased 57 percent year¬over-year, including the negative impact of currency. The international ARPU rose 7 percent year¬over¬year.
Performance in the quarter benefited from the launch of several series like Making a Murderer and Fuller House; along with new seasons of old series like House of Cards and Daredevil. A diverse mix of new films, documentaries, series and kids shows available globally complemented this.
An official company statement quoted, “By expanding broadly at once, we are learning more quickly about how best to please consumers across a wide variety of cultures and markets.”
