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Wednesday, January 20, 2016

Netflix global push grabs more customers than expected.

Netflix's aggressive push into international markets won more customers than the video streaming service and its investors expected last quarter, sending its shares surging 7% last night.

The online video company said it had 74.8 million subscribers at the end of December and forecast 6.1 million more up to March.

The increase will be fuelled by its expansion this month into virtually every country except China, where it is exploring ways to launch its service.

The projection is more bullish than the 4.94 million average estimate of analysts surveyed by FactSet Street Account.

Netflix started sending DVDs to customers by mail two decades ago.

It now offers its subscribers unlimited online access to TV shows and movies from Hollywood studios plus its own original shows such as "House of Cards" and "Orange is the New Black."

New customers overseas are countering slowing growth for Netflix in the US, the company's biggest market. It added 1.56 million US subscribers in the fourth quarter, below the 1.65 million it forecast, and less than 1.9 million a year earlier.

"Our high penetration in the US seems to be making net additions harder than in the past," the company said in a quarterly letter to shareholders.

Netflix said it expects US subscribers to jump 1.75 million this quarter. The company will likely benefit from the return of hit show "House of Cards" and a traditional bump in interest at the start of the year from people with new TV sets.

Internationally, Netflix added 4.04 million subscribers, compared with its estimate of 3.50 million. Netflix does not break down where its international subscribers are based.

From January up to March, the company expects to add about 4.35 million international subscribers.

Netflix said it may be able to start a service in China this year, but it may take longer.

"We have work and uncertainty ahead," the company said in its investor letter. "Our expectations are modest and long-term."

Netflix said revenue rose 22.8% to $1.82 billion inthe December quarter. Analysts on average had expected revenue of $1.83 billion, according to Thomson Reuters.
             
Excluding items, Netflix earned 7 cents per share, ahead of analysts' average estimate of 2 cents per share.

By: Reuters.

Review: Emerging Market Formulations & Research Unit, Flagship Records.
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