Netflix will need 2 years to become profitable in Mexico
Despite the low penetration of broadband in Mexico, Netflix sees a rising trend in the use of Internet for movies on demand in the country and an opportunity to position itself as an important online movie and TV show distributor.
In the presentation of their services for the Mexican market, Reed Hastings, Netflix’s founder and CEO, acknowledged that the challenges in the country are substantial and considered they will invest at least two years with finances in red numbers before the business starts to become profitable.
With an investment of $70 million in 2011, purchasing of licenses and marketing operations in Latin America, Hastings said his immediate goal is to get as many subscribers to finance the cost of the expansion in the region. Netflix will require about 1 million loyal users paying a monthly subscription of $7.99 per month (or 99 pesos) for 12 months to recover their investment.
As a first step, Netflix content may be viewed on computers, game consoles, Sony PS3 and Nintendo Wiis connected to the Internet and broadband and three models of Smart TV from the electronics giant, Samsung.
Within two months it will be available Android OS and iOS phones.
TECHNICAL SERVICE CONSIDERATIONS
The promise of Netflix is that if a user can view videos from the YouTube website without issues, they can do so from Netflix too. The system is designed to enable connections streaming content from 500 kbps for high definition, the user’s connection must exceed 2 Mbps.
Reed Hastings, Netflix founder and CEO, found that video services will increase the supply of broadband packages at affordable costs.
Hastings believes that content partnerships with the biggest local TV companies, Televisa and TV Azteca , and the rest of the 85 production companies with which Netflix has signed an agreement to distribute material in Latin America, will “gather the world’s best content and make it accessible to users.”