Netflix overseas sales set to overtake US

Netflix has said it expects its overseas sales to overtake those in its US home market for the first time in the next three months.

The forecast came after the streaming service reported the fastest revenue and subscriber growth in its history.

Netflix now has 125 million subscribers, after adding 7.4 million more between January and March.

Nearly three quarters of its new subscribers came from outside its home market in the US.

GBH Insights analyst Daniel Ives said the results showed "the company's aggressive international expansion strategy" was bearing fruit.

"[Is is] putting major fuel in the company's growth engine for the rest of 2018 and beyond," he added.

Revenue grew 43% from a year ago, slightly above forecasts at $3.7bn (£2.6bn), driven by the increase in new subscribers and a 14% rise in the average cost of a Netflix membership.

The results suggest Netflix's strategy of investing in original content such as The Crown and Stranger Things to drive subscriptions has worked.

The firm's executives admitted they were surprised by the company's rapid growth.

David Wells, Netflix's chief financial officer, said "the business had grown faster than we expected."

In a letter to shareholders, the company said it plans to invest up to $8bn this year in new TV series, films, documentaries and other programmes in several languages "to serve the diverse tastes of our growing global membership base."

However Netflix faces increasing competition from rivals such as Amazon and Disney which are developing their own online video offerings.

Walt Disney will stop supplying new movies to Netflix starting next year and will instead start its own streaming service for families.

Yet analysts say the firm's dominance will also make it tough for rivals to catch up.

"Netflix has changed the industry in a profound way and in doing so has given itself a significant lead, making it very difficult for the traditional media companies, or even other big tech companies, to catch up," Deutsche Bank analyst Brian Kraft said.

Netflix co-founder and chief executive Reed Hastings admitted that the firm had just a fraction of the viewing hours of Youtube or TV but said whether its success continued was "all up to us".

"Whether or not our share of that grows or shrinks is really up to whether or not we produce great content, market that well, serve it up beautifully, and if we do that well, earn more of consumers' time then we continue to grow and if we get lazy or slow we'll get run over just like anybody else".