Netflix reported today that its base of subscribers outside the United States grew from 4.31 million to 6.12 million in the final quarter of 2012, an increase of 42%. The Los Gatos, California, company had just 1.86 million international subscribers a year ago, meaning that it has grown abroad at an annual rate of 229%. Only 8% of Netflix’s subscribers in the fourth quarter of 2011 hailed from outside the US; now more than 18% do.
Those are massive numbers for the company, which believes that it can tap big growth markets outside its home country. A lot of the new subscribers come from Nordic countries, where the on-demand movie subscription service launched last quarter.
Netflix loses money on its international operations—some $105 million in the last quarter of the year, contributing to a total loss of $389 million on its international businesses in 2012. Netflix needs to be careful about its losses: Wall Street was concerned last year that the company would not be able to pay off its debts when they came due.
However, if Netflix can ply its maturing international base to bring in more cash, those concerns may be moot. For instance, it reported losses lower than expected for the fourth quarter, and projects they’ll decrease in the coming year:
Over the course of this year, we expect to see declining losses in our current international markets as member growth exceeds growth in content spending. With a Q1 guidance midpoint of $87 million in international losses, we expect a sequential improvement of $18 million, with more modest sequential improvements expected in subsequent quarters.
For the first half of 2013, we aren’t planning to launch additional international markets. We are evaluating several expansion markets for late 2013 or 2014, but have not made any decisions yet. Our launch in the Nordics was very successful, confirming our belief in the large international opportunity for our service.