Netflix’s aggressive expansion into international markets appears to be paying off. Having launched its service in over 130 countries in January 2016, the company reported the first contribution profit for its international streaming segment in the first quarter of 2017.
According to the most recent letter to shareholders, profit growth in more mature international territories outpaced investments in newer markets in the first three months of the year. However, Netflix plans to continue investing in international growth and expects to return to a small deficit in the ongoing quarter.
Perhaps the biggest challenge in operating at a global scale is managing content licenses for so many different markets. With this in mind, Netflix’s original content will play a huge role in determining the company’s future success and profitability. While licensing deals have to be negotiated individually for each market, Netflix can roll out its own content to a global audience without facing substantial additional costs.