Shares of Netflix (NASDAQ:NFLX) are rebounding this week. The stock has gained as much as 8% after the company crushed earnings estimates and delivered its best third-quarter subscriber growth ever, adding 6.8 million new members, slightly below its forecast of 7 million. Part of the jump can be attributed to relief that Q3 didn't repeat Q2's underwhelming performance.

Nonetheless, plenty of Netflix investors may still be nervous about the growth stock's future prospects. The company is about to face a wave of new competition. Apple (NASDAQ:AAPL) and Disney (NYSE:DIS) are both set to launch new services in November, and HBO Max (part of AT&T's Warner Media) and Peacock (from Comcast's NBCUniversal) will likely hit streams in the first half of 2020.

Additional entrants will not only compete for viewers but also potential content, meaning production costs will likely rise as Netflix and others outbid each other for the best scripts and talent. It also explains why Netflix was willing to pay at least $500 million, according to The Wall Street Journal, for streaming rights to older hits like Seinfeld, about triple what Hulu (now controlled by Disney) paid five years ago.

While Netflix's domestic subscriber growth has already slowed, due in part to a $2-per-month price hike at the beginning of the year, the company has an ace up its sleeve: its massive international presence.

A Netflix menu featuring Stranger Things

Image source: Netflix.

Better on the road

From this point on, the vast majority of Netflix's growth is going to come from international markets. The company has already reached the bottom edge of the domestic subscriber range (60 million to 90 million) it targeted in its "Long-Term View" statement. It has nearly 100 million members outside of the U.S.

That gives it a tremendous head start over competitors just entering the field, even ones with globally-known brands like Disney. More importantly, Netflix has succeeded in localizing the content it streams in countries around the world, which takes time and capital and will not be easy for competitors to match.

In many of the countries in which it operates, Netflix provides its user interface, show subtitles, and voice dubbing in local languages. In its most recent quarter, it added Vietnamese, Czech, and Hungarian to that list.

Management also shared in the recent quarterly report that Netflix is churning out a number of hits abroad that American audiences are largely unaware of. For example, the third season of La Casa de Papel ("The House of Paper," but known as Money Heist in English), a Spanish-language thriller, attracted 44 million views in its first four weeks, a record for non-English-language programming. For comparison, the third season of Stranger Things scored 64 million views in its first four weeks. Netflix also noted that Sintonia, its newest Brazilian original, was the second-biggest first season for a show in Brazil; The Naked Director became the biggest launch in Japan last quarter and was popular around Asia.

So far, Netflix has released more than 100 seasons of scripted local-language content for 17 different countries. Next year, the company is planning on screening more than 130 more new seasons, doubling down on that strategy in order to drive growth. Local-language content, it seems, has become a source of competitive advantage.

Additionally, Netflix has also forged partnerships with telecoms and pay-TV operators abroad, the way it has in the U.S. with companies like T-Mobile US. Just in the recent quarter, the company announced new bundles with partners in Italy, France, Japan, and Mexico. Those deals help make Netflix subscriptions especially sticky, and they aren't offers that new competition can immediately match.

A huge head start

In the recent shareholder letter, CEO Reed Hastings addressed new competition:

We did well during the first decade of streaming. We've been preparing for this new wave of competition for a long time. It's why we started investing in originals in 2012 and expanded aggressively ever since -- across programming categories and countries with an ambition to share stories from the world to the world.

Netflix's base of nearly 160 million global subscribers has given it a huge head start over the new competition; that gap will be especially important outside the U.S., where localizing content and building up a streaming brand takes time. Notably, the international launch of Disney+ will happen more gradually over the next year, giving Netflix more time to sign up new subscribers. Apple TV+ will launch globally on Nov. 1, but it's worth remembering that Apple's brand doesn't have the same cachet outside of its home market, as iPhone penetration rates tend to be lower internationally. Meanwhile, Netflix's upcoming original movie slate, which includes the Martin Scorsese film The Irishman, should help keep domestic subscribers locked in.

With the arrival of Apple and Disney, Netflix is about to be tested as never before. However, the company's strength and momentum in international markets should give investors an additional level of security. Looking outside the U.S, it's clear this growth story is far from over.