Netflix’s international subs to outnumber US customers by 2018

As Netflix’s subscriber growth in the United States, where the streamer already is in 45 million households, slows, it should come as no surprise that the bulk of its future growth is expected to come from its international business.

In fact, IHS this week forecasts that not only will growth be more rapid globally moving forward, but that the number of international subscribers will surpass U.S. subs by 2018.

“At the moment, Netflix has 79.9 million total paying subscribers,” said Irina Kornilova, senior analyst at IHS Technology. “By 2018, international subscribers will overtake the number of subscribers in the US for the first time, and by 2020, Netflix will have 75 million international subscribers.”

After growing 30% between 2014 and 2015, the total number of Netflix subscribers is forecast to grow 2% in 2016 as territorial expansion reaches its peak. By 2018, Netflix will break the 100 million-subscriber mark.

International paying subscribers are forecast to grow 38% in 2016, with more than 2.8 million of these new paying subscribers coming from the 130 new markets that Netflix launched in at the beginning of this year.

Netflix global revenues are expected to reach $13 billion by 2020, with more than half (53%) expected to come from its international markets. Domestic streaming revenues are expected to hit $6.2 billion by 2020, and international revenues to reach $7 billion.

This year, Netflix is expected to have strong markets in Western Europe, with the United Kingdom being the biggest at more than 6 million subscribers, followed by the Netherlands and Nordic (5.4 million subscribers combined). Despite strong competition from other SVOD services in Germany, especially first-in-market Amazon Prime, Netflix is expected to have 2.2 million paying subscribers there by the end of the decade.

The “soon to be localized” markets of Poland and Turkey – where Netflix plans both local-language sub-titles or dubbing and new locally created content — will drive further uptake in the Central Europe region, but the effect of the localization won’t immediately be apparent.

 “With the worldwide launch, Netflix has launched a platform upon which it can build and differentiate the service to fit specifics of every region in the future,” Kornilova said. “Netflix is starting this localization process in Poland and Turkey this year. Subscribers in these countries can expect an addition of local languages to the user interface, subtitles and dubbing of content. This will help drive new subscriber numbers dramatically.”

Netflix will continue with localization and development of new territories through 2017 and 2018, especially in Asia where it faces strong competition from a number of local and internationally based competitors.

Still, Netflix is expected to see subscriber growth of 133% in 2017 and 62% in 2018. By 2020, subscribers in countries rolled out in 2016 will represent a quarter of all international subscribers, reaching 19 million.

Netflix has yet to launch in China, a topic the company generally has been circumspect to discuss. The country could provide a massive audience… and massive headaches in terms of payment and piracy.

Stay tuned.

Jim O’Neill is Editor of Videomind and Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn