When Netflix took the bold and unexpected move of opening up its service to almost every country in the world back in January, South Africa was one of those regions finally able to access its library of streaming content for the first time (well, at least without using a geo-hacking service).

The move hasn’t seen a massive number of subscribers rush forward to sign up, however. In its latest quarterly report, released last year, the company says that it saw an increase in international subscriptions, but not enough to stop shares from tumbling tumble this week as it revised down its future forecasts.

According to the statement, Netflix added 4.5 million new subscriptions in territories outside the USA. Netflix has been available in the US since launch, so it comes as no surprise that it has 47 million total subscriptions there. But it could have reached its peak growth with the international expansion, as the Q2 forecast only predicts an increase of 500 000 subscribers – compared to 6.74 million in the first quarter.

Things aren’t look too great for the future elsewhere, as it forecasts that only 2 million new subscribers overall will be added in the next quarter.

Naturally, the weak forecast didn’t sit too well with investors. The stock price for the streaming giant dipped to about $92.38 per share, before recovering somewhat at $100.

Netflix doesn’t offer further breakdowns for viewers in its international territories, but since its big expansion in January it now operates in 130 countries. So on average, it’s gained 35 000 new subscribers per country.s.

Netflix is notoriously secretive about the amount of subscribers per territory, so there are no accurate figures as to the actual amount of subscribers in South Africa – or anywhere else, for that matter.

The question which it hasn’t answered, but which is critical to investors, is whether the bulk of those 4.5 million new subscribers came from places where Netflix has been available for a long time and has been making local content – like the UK, Germany or Brazil – or whether they’re from countries which have only had access to its services for a few months.

If it’s the former, and new territories are growing slowly, the challenge will be for Netflix to investors to hold on and play the long game while it attempts to become the de facto global platform for TV. We ran the numbers before Christmas showing why territories like South Africa are unlikely to turn a profit for the company for a long time.

Ultimately, Netflix is all about investor confidence. It’s been making money, but expansion is going to be time consuming and expensive. If it starts to take a knock on its US audience, investors may panic and undermine it’s whole strategy.

As it stands, however, Netflix beat it’s target for new subscribers in the US, adding 2.3million members in the States over the three month period compared to a forecast 1.75million (although it is less than the 2.3million added in the same period last year). Most importantly, the firm’s US profits are a third up on the same period last year, more than offsetting the fact that it’s international division’s losses are higher.
It’s overall profit in the US was $323million, while losses in international were $80million (compared to $65million last year).

In any case, by the end of the second quarter this year, Netflix should have 81 million subscribers across the board. But only time will tell if Netflix’s crackdown on VPN and geo-unblocking and slow uptake is less well-connected countries will impact its earnings going forward.

Charlie started his professional life as a motoring journalist for a community newspaper in Mpumalanga, Charlie explored different journalistic angles since his entry into the fast-paced world of publishing in 2006. While fostering a passion for the arts, Charlie developed a love for technology – both which allowed him to serve as Entertainment and Technology Editor for an online publication. Charlie has since been heavily involved in consumer technology for various websites and publications. He thoroughly enjoys World War II films and cerebral documentaries; aviation; photography and indie music. Oh yes, and he also has a rather strange obsession with collecting coffee mugs from his travels.