When Netflix announced plans to enter into the Latin American market last year, it’s doubtful that company executives expected the experience to be entirely smooth sailing. The region poses many obstacles in terms of law, economics and culture, and the corporation was surely well aware. That said, Netflix’s rollout in Latin America has not been easy, to say the least. And while it would be too extreme to call it a shipwreck, it’s fair to say it’s been a bumpy ride.
One of the most problematic points for Netflix has been the Brazilian market that, as we all know, proposes big opportunity at a price. Deemed “challenging” by Netflix COO Jonathan Friedland, Brazil added fuel to the fire of what was already a tough 2011 for the company. And while things are definitely looking up this year, CEO Reed Hastings revealed to investors in January that Netflix is likely two years away from becoming profitable in Latin America.
A rough start? Definitely. But a death rattle? Not at all. Netflix remains the world’s leading internet subscription service for television and film. Today, it has over 26 million streaming members globally, three million of which are outside of the United States and one million that reside in Latin America.
Netflix in Latin America has experienced a slight advantage as free sources of streaming TV and films in the region, such as Cuevana.tv, have declined significantly with the fall of Megaupload at the beginning of this year. This has given Netflix a window into the market as the next best bet for accessing television and film content online.
Nevertheless, Netflix’s pioneering crusade could come back to haunt it. If Netflix proves successful , it is possible that networks and channels like Sony and FOX will go their own way in the region and offer their series and content to viewers directly. If such circumventing takes place, Netflix will again find itself in a rather tough position and be forced to rethink its strategy yet again.
Netflix Director of Corporate Communications Joris Evers answered a few of our questions regarding Netflix’s experience in Brazil and Latin America, touching on what’s happened thus far and what’s to come.
Emily Stewart: When Netflix hit Latin America and, specifically, Brazil in September of last year, there was a lot of criticism, ranging from the content offered in its library to audio quality and forms of payment. Were you surprised at the backlash? Have you faced similar reactions in other locales? How do you think it affected Netflix’s public image on both local and international levels? Have the initial issues been resolved?
Joris Evers: We are very happy about the initial reception in Brazil and Brazil has become one of the two most important markets for Netflix in Latin America. Since we launched in September, we’ve spent a lot of time listening to members and adapting our service to meet their expectations. There were three things members really cared about and asked us to improve:
1. Catalog size: We have doubled the amount of movies and TV shows since we started
2. Subtitles: Members told us they prefer to watch movies and TV shows in their original language with subtitles instead of dubbing. We now offer essentially all titles in the original language with subtitles and the option of Portuguese audio.
3. Devices: Working with our device partners, we have significantly expanded the number of devices that you can use to watch Netflix on in Brazil. We launched with Samsung TVs and PS3 as well as PCs. Today you can use Apple devices (iPhone, iPad, Apple TV), TVs from many brands, Blu-ray players, streaming media players like the WD Live and mobile devices running Android or Windows Phone. This will continue to grow.
On the catalog front, we continuously add movies and TV series to Netflix and really have a wide range of content available today, with great things to watch for everybody, from children to grandparents. We have movies, comedy, children’s content and great TV shows. We have several first run movies on Netflix in Brazil, including Oscar winner for Best Picture winner The Artist (on Netflix now) and The Hunger Games (Soon).Recently we announced a deal with FOX, bringing all past seasons of 24, Prison Break, The X-Files and Arrested Development to Brazil (available viewing beginning July 15) as well as current and past seasons of How I Met your Mother, Glee and Bones. We will also have Something Borrowed and From Prada to Nada. We are adding more local movies, more documentaries and more standup comedy and classic sports programming as well.
ES: Brazil is generally seen as a market that is quite hard to penetrate due to bureaucratic issues. What strategies did you employ to enter the market?
JE: Click and watch video subscription services are new to Brazil and as a result, it takes time to educate people about how easy Netflix is to use, how safe it is, and what a great value we offer for a very fair price. There are some unique challenges, though, in Latin America and Brazil, which are different from our other markets:
– Streaming is at its earliest stages in Brazil, but it will grow significantly, especially with the growth of broadband connections.
– Online payments and credit card payments aren’t as common. There’s still a lack of trust in electronic commerce. We are exploring new payment options for the Brazilian market (and other countries) as a result.
ES: How many titles do you offer for Brazilian users right now? How many users do you have in Brazil? What are those numbers like in Latin America?
JE: We have more than one million members in Latin America. That’s a milestone we are happy to have achieved within one year after launch. Netflix in Brazil has many thousands of hours of great TV shows and movies. We don’t disclose the number of viewables because that changes constantly as titles come online and go offline. We have also found that the number of viewables is not a measure of our members’ happiness.
Unguarded about the issues the company has faced in the past, Evers remains openly optimistic about the future of Netflix’s place in Brazil, and rightly so, as long as the company’s ability to acclimate remains.