Netflix (NASDAQ:NFLX) has been one of the best-performing stocks of the last decade, returning 2,400% as the company has successfully transitioned from DVDs by mail to a streaming giant. Nonetheless, it's had its fair share of detractors along the way, and their complaints are familiar at this point.

Bears have long argued that Netflix's streaming advantage will eventually be eroded by new competition, which will steal market share as they make streaming a priority. In the same line of reasoning, they tend to believe that most of Netflix's original content is mediocre, implying that the leading streamer isn't even particularly good at what it does and that it would easily be surpassed by a dedicated competitor.

Netflix has faced a wave of new streaming competition in the U.S. as services like Disney+, Apple+, Comcast's Peacock, and AT&T's HBOMax have all come on the market in the past year. There are signs that Netflix has ceded market share as it encounters new competition, though it's still the biggest piece in what is an ever-growing pie.

The receptionist at Netflix headquarters.

Image source: Netflix.

But the biggest thing Netflix bears seem to be missing with these arguments is that they are almost all focused on the U.S. market, which now accounts for only about one-third of Netflix's total subscribers. The company's business is maturing in its home market, where more than half of all households in the country subscribe to the service, and it's already reached its target range of 60 million to 90 million subscribers. Its biggest growth opportunities are abroad, and that's also where Netflix has its greatest advantage.

Signs of strength abroad

Netflix recently showed its confidence in Canada by raising monthly subscription prices for the first time in two years, boosting the price by a Canadian dollar to CA$14.99 ($11.38) on standard plans and by CA$2 on premium plans to CA$18.99.

Netflix dominates the Canadian market since the company has historically faced less competition north of the border, though content tastes are nearly the same as in the U.S. For example, Disney's Hulu is over a decade old now, but never made the trip north, and is still only available in the U.S. 

According to eMarketer, 52% of Canadian households subscribe to Netflix, making it the clear leader over No. 2 Amazon Prime at 25% and No. 3 Disney+ at 17%. The research firm also sees the number of Canadian Netflix viewers rising from 14.6 million in 2019 to 18.4 million in 2024.

In Australia, meanwhile, Netflix said it would raise prices by a similar amount on its two lowest tiers. Canada and Australia are among the markets most similar to the U.S., and they attest to the company's belief that it has added value to warrant the price increase. The price hikes also seem to indicate that subscriber growth has continued to be brisk despite tamped-down expectations for the third quarter.

The international advantage

While competitors may be leveling the playing field in the U.S., Netflix has a huge head start over competitors in the international market. Hulu, HBOMax, and Peacock aren't even available outside the U.S. right now.

While Amazon Prime Video is offered all over the world, the Prime package that Americans are familiar with, which is best known for free two-day delivery, is only available in about 20 countries. So the primary incentive to join the service doesn't exist in much of the world.

And Disney+ has expanded rapidly into Europe and elsewhere, but the company has currently staked its business almost entirely on legacy content since The Mandalorian has been its only original series to get much attention.

On the other hand, Netflix regularly releases new local-language content at a pace that its competitors simply aren't equipped to match, and has generated foreign-language hits like Money Heist and Roma.

Despite setbacks from the coronavirus pandemic, Netflix had restarted production on 22 shows in 11 countries in Europe by July, and the company never stopped in countries like South Korea. That puts Netflix in a better position than rivals to emerge from the crisis with a steady pipeline of content, and it also isn't facing the challenges of not being able to release movies in theaters.

But most importantly, Netflix's robust growth abroad and the content production infrastructure it's built outside the U.S. give the company a significant advantage over its new competitors, which are only just starting to expand into foreign markets. Overvaluing the domestic market and ignoring its international potential is a mistake. That edge is unlikely to go away anytime soon and will drive the company's growth over the coming years. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.