Netflix plans more international launches

Netflix said it plans to launch in new markets next year as part of its ongoing expansion efforts, as it revealed that it is on track to top the 10 million international subscriber mark this year.

Announcing its third quarter results, Netflix said that it now has more than 40 million members – 31.09 million in its domestic market of the US – and is on track to hit 10.5 million international members in Q4.

“Our success this year in increasing international net additions to nearly the level of our domestic net additions shows substantial momentum and confirms our belief there is a big international opportunity for Netflix,” said CEO Reed Hastings and CFO David Wells in a letter to shareholders.

Though Netflix did not name which countries it was looking at next, its said its current international net additions were way up from the prior year at 1.4 million new members, driven by its expansion to the Nordics and the Netherlands since last Q3.

On the content side, Netflix pledged to double its spend on original content in 2014, though its outlay on original content will remain less than 10% of its overall content spend.

“Over the next few years we aspire to support creation of some of the most compelling and remarkable content ever produced,” Netflix said.

The company does not disclose viewing data, but said Orange is the New Black is the most-watched of its slate of original dramas. It added that while the its original series generate the most headlines, its exclusive acquired series drive more viewing.

Netflix added that original factual programming is in the works: “We will soon expand into original documentaries, a category that does well on the Netflix service,” it said.

Netflix’s total quarterly revenue was US$1.1 billion (€804 million) compared with US$905 million at the same point a year ago. Operating profit was US$57 million versus US$16 million across the same period. The loss from the international operations in the third quarter was US$74 million but will narrow to US$65 million in the fourth quarter, according to Netflix guidance.

Netflix has recently struck deals with Virgin Media and Com Hem and said it is open to working with pay TV operators to launch its service on their networks. “We are open to more of these integrations with cable set-tops around the world, but given the fragmented technology footprints, we think it will be many years before cable set-top boxes match Internet set-top boxes for Netflix streaming volume. As a general rule, we’re happy to support devices from other video providers as long as we get application placement commensurate with our popularity.”