"Great storytelling knows no geographical bounds," Netflix (NFLX) chief content officer Ted Sarandos told a crowd at the company's "See What's Next" event in Berlin on Wednesday.
And, it would appear, a great company like Netflix knows no geographical bounds, either. The company has witnessed outstanding growth in international markets, and as its executives are making clear, it's showing no signs of stopping.
Just as Amazon (AMZN) has revolutionized the way consumers shop, Netflix has changed the way people view media. Thanks to its popular video streaming service, Netflix has led the charge of consumers "cutting the cord" to cable and even network television. That's provided a game-changing challenge for media and cable companies such as Time Warner (TWX) and Comcast (CMCSA) .
It seems, though, that the company has hit the maturation point here in the U.S. As analysts with UBS wrote back in January, "In the U.S., after nearly a decade of streaming service availability, it appears that penetration of streaming services has stagnated at around 50% of U.S. [broadband] homes."
But there's still plenty of room for growth elsewhere in the world, and that's where Netflix is now concentrating its efforts.
During the fourth quarter, the company added 5.12 million subscribers in 190 countries across the globe. And Netflix is looking to expand that number by enhancing its relationships with cable and mobile companies around the world. These partnerships help to increase Netflix's brand recognition in countries where it hasn't yet become a household name. In turn, this keeps customers subscribing to other operators rather than cutting the cord and just turning to Netflix online.
On Wednesday, Netflix underscored the importance of its growing European market by announcing that it will invest more than $1.75 billion into licensed and original content. The company has its finger in nearly 100 original productions in Europe. According to CEO Reed Hastings, original content from Europe is viewed by more than 93 million subscribers around the world. This makes Netflix an attractive partner for international media companies looking for ways to produce and distribute their work.
By continuing to tap the international market, Netflix should continue to perform well for its investors. In the fourth quarter, the company made $1.4 billion in revenue from its North American segment. The rest of the world accounted for nearly $1 billion, meaning there's still a huge market available here.
Netflix trades around $140 per share. But some analysts are calling for the stock to reach as high as $200 per share in the next 12 months. That would represent some breathtaking gains for investors who get in today.
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