Factors Hindering Netflix User Growth Internationally, Especially in Africa

Netflix, the undisputed heavyweight of internet subscription services for TV, currently boasts 83 million subscribers worldwide. However, according to Market Watch, subscriber growth seems to be lagging, especially internationally.

In the most recent quarter, Netflix reported an increase of just 1.68 million new subscribers globally, falling short of the projected 2.5 million. This figure breaks down to an addition of 160,000 new subscribers in the U.S and a slightly larger 1.52 million overseas. According to Netflix, the main reason for this slowed growth is the increase in its pricing model. The ensuing media buzz on the price hike has caused a drop in new memberships, or ‘net adds’ as they are referred to.

This unexpected disappointment has created a ripple effect within the market, putting considerable pressure on the company’s share value. Despite this, Netflix maintains it expects its subscriber numbers to increase significantly in the next quarter — projecting to add 300,000 subscribers in the U.S alone and another 2 million internationally.

In terms of financial growth, Netflix reported revenue figures of $2.11 billion for the quarter, with earnings per share standing at $0.09. Interestingly, these figures closely align with the predictions made by investors, who expected the company to report around $2.11 billion in revenue and $0.03 earnings per share.

The miss in revenue expectations has been widely attributed by analysts to a recent hike in the service’s prices. Another grim culprit may be the strength of the American dollar against other major currencies, which places economic strain on international users deciding whether to subscribe.

Turning our gaze to Africa, it becomes evident that Netflix has several hurdles to overcome in this particular market. Setbacks include a lack of awareness about the service, ongoing economic concerns, and a deep-rooted issue of digital piracy.

Indeed, the Nigerian Copyright Commission outlined in a 2014 report that Nigeria, among other countries, faces a rampant piracy problem. This issue, encapsulating both developed and developing nations, proves a daunting challenge to law enforcement agencies and societies at large. Piracy rates in Nigeria were alarmingly high, 82 to 83% from 2007 to 2012, clearly demonstrating the magnitude of obstacles Netflix must navigate.

Further factors hindering growth in Africa encompass variable internet access, regional competition from start-ups like iROKOtv in Nigeria, and MTN’s VU and Nasper’s Showmax, all of which have a considerable user base that prefers their more tailored content.

Despite these challenges, Netflix remains optimistic about the future. The media giant anticipates an uptick in users in the next quarter, thanks in part to their deep financial pockets, a trait that has helped other companies such as Uber flourish in competitive markets. Time will tell if Netflix’s global subscribers can surmount the million mark and if Africa, along with the international community, will play a considerable role in this endeavor.