Latin American audiences will be able to choose between all the major global video streaming platforms by the end of 2021, but none of them will take Netflix away from the market leadership anytime soon. According to Digital TV Research, the firm will reach 48 million subscribers in the region by 2025, a 54% growth in six years that may guarantee it 17 million more users than its closest competitor. That’s enviable.
But the projection hides a revealing fact on the increased competition in the streaming market. Last year, Netflix alone commanded 75% of streaming subscriptions in Latin America; in 2025, even with robust growth, the market share under its control will be around 45%. Significantly smaller, but the company will still have almost half of the pie for itself.
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According to Netflix’s results during the last quarter, revenues in the region were affected by the devaluation of local currencies, even if the platform has gained 2.9 million new subscribers from January 1st to March 31st, 2020 – an expansion of 9% versus a 3.4% increase in subscriptions in the United States and Canada.
Reed Hastings, CEO of Netflix, stressed last year that gaming and sleeping are among his main competitors, but there is no denying that direct challengers to his company are getting stronger. Globally, Netflix now has 182.8 million, and solely by its sheer size, it will be hardly displaced soon – or ever.
In the meantime, the firm remains committed to its famed ability to reinvent itself – and it highlights the “traditional” origins of those services set to be its two biggest competitors. “Our subscribers have always had a lot of choice when it comes to entertainment – including from Disney and Warner [HBO‘s owner]. To stay ahead of the competition, we had to reinvent ourselves several times: we switched from DVDs to streaming; started producing original content and not only licensing; and we expanded to films beyond series”, said the Brazilian division of the company, in a statement sent to LABS.
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The strategy for Brazil, where its subscription base accounts for almost a third of Latin America, focuses on the variety and diversity of content. “We will produce stories tailored to different languages and preferences and that can entertain our subscribers no matter what they are seeking,” says Netflix. “We are always searching for the best stories to tell from different perspectives and cultures, no matter the format, and for that we work with established talents and new voices. Pedro Aguilera is a good example of this – fresh out of college, he created our first original Brazilian series, 3%, whose first season had half of its audience coming from outside Brazil.”
Lottie Towler, senior analyst at Ampere Analysis, a British consulting firm that specializes in media, notes that the streaming giant is investing ever more in content produced outside the United States. “For the time being, HBO Max, Disney+, Peacock, their upcoming commissions and the shows that they are working on will be almost all US produced”, says Towler.
Netflix is starting to very much localize its content. It might have an advantage in certain markets where this local content is favored over US produced shows that new competitors will be offering.
Lottie Towler, senior analyst at Ampere Analysis
Local partnerships are not to be ruled out. “We want to bring the best stories to our subscribers, regardless of where they were made. We have agreements and partnerships with some [Brazilian] TV stations, such as Record and SBT, not only to license their content – we already show Stranger Things on SBT, for example”, says the company.
One platform to rule them all
Even not taking into account its future strategy and goals, Netflix’s huge advantage point is its household status across Latin America, where its brand is sometimes used as a synonym for video streaming services. The firm massively dominates across the region, where it has been present for 9 years. “In some of the key markets as in Mexico, for example, Claro Video does as well as Amazon, but both are dwarfed by Netflix’s success”, reckons Towler.
According to JustWatch, an international streaming guide, Netflix leads the interest of viewers both in Brazil and Mexico, swaying 30% to 35% of its charts, which include pay-per-view streaming platforms. JustWatch measures the audience’s interest by tracking its 20 million monthly users in 46 markets, according to their inclusion of movies and shows to personal watchlists, clicking out to the streaming services as well as selecting the platforms they subscribe to.
Content aside, platforms will also lure users with prices
Apart from content, pricing will be a key weapon in this fight. Amazon Prime Video and Apple TV+ charge BRL 9.90 monthly, while Netflix’s basic subscription (which does not offer HD videos) costs BRL 21.90 in the country. Entrants’ prices may rise, but low cost and free trials are going to be a form to lure customers away from Netflix. As for upcoming Disney+ and HBO Max, no one knows their pricing plan for Latin America – in the US, Disney’s platform is cheaper while HBO’s launched charging a higher price than rivals.
Nevertheless, due to exchange rates, the average monthly subscription fees in Latin American countries are among the cheapest and least profitable worldwide. Platforms reduce them to scale up. “We base our prices on the value we add to our members and on the desire to ensure that our service remains accessible to people”, explains Netflix Brazil.
In Brazil, for instance, the company saw its revenue decline by 25% in the first quarter – its standard, intermediary subscription plan was worth $8 in 2019 and now hovers around $6. For its basic plan, the drop was from $5.30 to $4, less than half of what it costs to US consumers.
