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BREAKING: Netflix global subscriptions hit 81.5 million

Despite a massive overseas expansion, the SVOD's Q1 results show overall subscriptions and revenues are up, outpacing targets slightly.
April 18, 2016

Netflix has released its latest quarterly results, showing renewed strength in its ability to hit major revenue and subscriber growth targets after falling short on some of those key metrics last year.

The SVOD giant rang in $1.8 billion in global revenue in Q1 2016 and added 6.74 million subscribers worldwide, bringing its total subscriber base to 81.5 million, slightly ahead of previously projected targets. Of the total subscribers, 42% are now outside of the U.S., the service confirmed in a letter to shareholders released Monday, April 18.

The letter attributes the service’s positive performance to both its aggressive international expansion plan and a surge of sign-ups linked to the premieres of popular new originals such as Making a Murderer, Fuller House and the fourth season of House of Cards.

Its international operations, as predicted in Q4 2015, were a loss for the company, which rolled out operations in an additional 130 countries worldwide

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over the past quarter. Despite $652 million in international revenue, Netflix posted a loss of $104 million for its non-U.S. services.

International expansion has always been a costly venture for Netflix. After launching in Canada in 2011, it took Netflix four years to become profitable in the country. With many territories in its most recent round of expansions, Netflix has opted to pair with local telcos in order to ease its transition into new markets.

This time around, the SVOD has again acknowledged that there are still various challenges related to language and payment with its new territories.

“In most of these markets, so far, Netflix is offered only in English and payment methods are limited primarily to international credit cards. In the coming quarters, we will add more local languages, content, payment options and customer support,” the shareholder letter states.

Netflix’s domestic subscription numbers performed better than expected in Q1. It added 2.23 million new members, up from a forecast rate of 1.75 million. However, overall growth in the U.S. has slowed over the past two years: In Q1 2015, the SVOD added 2.28 million new subscribers, and 2.25 million in Q1 2014.

Netflix CFO David Wells has previously said the company is anticipating a slowdown in year-over-year additions, noting in an investor call, “the next 50 million are harder than the first 50 million in terms of growth.”

In all, the SVOD now has nearly 47 million subscribers in the U.S.

Rumors of a price hike even for grandfathered subscribers in the U.S. and other territories have dogged the service recently. Netflix had announced in 2014 that it would hold the $7.99 subscription price for existing customers for two years. As the deadline looms closer, the price hike has become top-of-mind for many users.

In its Q1 shareletter letter, Netflix confirmed it “hopes to maintain” the $7.99 price. However, on its website, the SVOD indicates the $7.99 rate will only buy a single stream and no longer support HD and UHD content.

Right now, new subscribers to Netflix can buy a standard package (with HD) for two streams for $9.99 per month. Premium service, with four streams and UHD, is $11.99 per month.

The same day that Netflix released its results, e-commerce giant Amazon announced that it would un-bundle its video service, Prime Video, from its Amazon Prime service package, allowing users to subscribe to Prime Video for $8.99 per month (previously, customers had paid $99 annually for access to all of Amazon Prime’s services, including its VOD).

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