IHS: More Netflix Subs Outside U.S. by 2018

23 Aug, 2016 By: Erik Gruenwedel

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With Netflix available in almost 200 countries, the number of foreign subscribers is projected to exceed domestic subs by 2018, according to new data from IHS Markit.

Netflix ended the second quarter with 79.9 million paying subscribers, including 46 million in the United States. IHS says Netflix will have 75 million international subs by 2020.

Subscriber growth was 30% between 2014 and 2015 and is projected to grow 21% this year. By 2018, Netflix will top 100 million subs, according to the research company, with international paying subs increasing 38% this year, including more 2.8 million new paying subs coming from markets Netflix launched in January.

By 2020, Netflix global revenue is projected to reach $13 billion, with 53% coming from foreign markets. Domestic streaming revenue is expected to reach $6.2 billion with international revenue topping $7 billion.

“With the worldwide launch, Netflix has launched a platform upon which it can build and differentiate the service to fit specifics of every region in the future,” Irina Kornilova, senior analyst at IHS, said in a statement.

Western Europe, with strong U.K. (over 6 million subs by the end of 2016), Netherlands and Nordic (5.4 million subs combined) markets, will be the leading region for Netflix outside the U.S., according to IHS. Germany, despite strong competition from Amazon Prime Video and free TV, is expected to reach 2.2 million paying subs by the end of 2020.

Kornilova said some of Netflix’s international sub growth would come from the subscription streaming pioneer’s focus on localized markets. While IHS contends the impact will be small at first, localized content offerings in Poland and Turkey will drive further sub uptake in the Central Europe.

“Subscribers in these countries can expect an addition of local languages to the user interface, subtitles and dubbing of content. This will help drive new subscriber numbers dramatically,” Kornilova said.

The analyst said Netflix would continue development of new territories through 2018, with the paying membership base increasing by 133% and 62% in 2017 and 2018, respectively. By 2020, subscribers in countries rolled out in January will represent a quarter of all international subscribers, reaching 19 million.

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