As shares of Netflix (
NFLX Quick Quote NFLX - Free Report) continue to climb following the release of its fourth-quarter earnings report, it is becoming clear that investors are impressed by the company’s continued growth. Perhaps the most important piece of Netflix’s earnings report was the incredible performance of its international business; this will be the key area to look at going forward. International Business Driving Growth
International membership grew by 5.12 million in the quarter, which significantly outperformed the company’s forecasted 3.75 million international adds. This growth was up from its 4.04 million net new international members in the year-ago quarter and brings the company’s international segment to 47% of its total membership.
In its shareholder letter, Netflix pointed to the increasing popularity of its region-based original programming to explain its international success. The company explained that while programs like its
Gilmore Girls reboot and Guillermo Del Toro’s Trollhunters are doing well in all regions, it is the performance of shows like 3% that is truly noteworthy. 3% is Netflix’s first-ever Brazilian original show and just the second produced in Latin America. The series is a dystopian thriller starring Brazilian actors Bianca Comparato and João Miguel. Netflix originally placed a one-season, eight-episode order for the show; a second season was confirmed last month.
Netflix said that
3% debuted as one of the most-watched shows in Brazil and “played well” throughout Latin America. The company also claimed that millions of people watched the English dubbed version of the show, making it the first Portuguese-language series to see success outside of Portugal and Latin America. India Becomes New Battleground
While it is clear that Netflix is the international leader in video streaming, the company is not unaware of its competition.
“Internet video is a global phenomenon. Amazon Prime Video expanded recently to match our territory footprint, while YouTube remains far larger than either of us in terms of global video enjoyment minutes,” the company said.
Netflix is right. With Amazon
AMZN now operating in a similar amount of international territories, the company is finally facing a serious threat on the global level. Of course, Netflix has quite the head start, but that doesn’t mean its victory is guaranteed.
Heading forward, it will be India that becomes the key battleground region for both companies. With over 1.2 billion inhabitants, India is home to 17.5% of the world’s population and is clearly a massive base of potential customers.
India sticks out as a key area for both companies, not only because of its size, but also because both services are relatively new in the country. It is also clear that both Netflix and Amazon are targeting India with very specific gameplans.
For example, Amazon just launched its Prime Video service in India last month, about a year after Netflix launched in the country. Several months before the launch, reports linked Amazon to a $300 million investment to make original Indian content.
(Also Read: Amazon Investing $300 Million in India for Original Prime Video Content)
Amazon brought Aparna Purohit, a veteran Indian film producer, in to lead its creative development in the country, and the company has also reportedly been working with Bollywood producers and independent production houses.
The news about Amazon’s expansion of Prime Video into India first broke over the summer, just a month after CEO Jeff Bezos announced an additional $3 billion investment in the country. Amazon already announced a $2 billion investment in 2014 and has created 45,000 jobs in India over the past several years.
Alas, Netflix is not without an India plan either. Netflix recently inked a deal with Red Chillies Entertainment, the production company of India’s Shah Rukh Khan.
“[Khan] is considered by many to be the biggest movie star on the planet. Netflix is now the exclusive global home for Khan’s new films and members will enjoy exclusive SVOD access to dozens of popular Red Chillies films from the past several years,” the company said in its most-recent shareholder letter.
The stakes are set. Netflix and Amazon will do battle for video streaming supremacy throughout the globe. We know from its recent earnings report that Netflix is off to a solid start. Look for both companies to continue to target India as the key international battleground.
Long-Term Buys You Won't See in the News
The stocks you see in today's headlines may not be in the news tomorrow or next week. If you're looking for profitable long-term investments, you may be interested to see what Zacks Research is recommending to our private members. These moves have double and triple-digit profit potential. Starting now, you can look inside our stocks under $10, home run and value stock portfolios, plus more. Want a peek at this exclusive information?