Netflix faces problems in Latin America

By Ben Fritz

May 16, 2012 12 AM PT

Launching in Latin America is proving not as easy as Netflix Inc. had hoped.

At an investor conference Wednesday in New York hosted by JPMorgan Chase & Co., Netflix Chief Financial Officer David Wells said his company is trying various ways to improve its prospects in the 43 Latin American countries where it launched last year.

Growth in the region has been slower than the subscription video company expected or that it experienced in its other foreign markets: Canada, Great Britain and Ireland.

Netflix has blamed its problems on several issues specific to the region, including lower broadband Internet penetration, fewer digital devices and greater complexities in processing payments through the Internet.

But Wells said that one of the biggest problems has been that unlike in the English-speaking countries where Netflix operates, consumers in Latin America are more skeptical about the idea of watching movies and TV shows online.

“The key thing we have learned with Latin America is that when a market has a competitor set, that may actually help us ... [so we] don’t have to convince or explain to people that click-and-watch, Internet-delivered entertainment will actually work,” he said.

Faced with a marketing challenge that will take time to overcome, Netflix is trying solve all of its other problems in the meantime.

Wells said that when the company first began doing business in the region, not all English-language content carried subtitles, but now 100% does. It has also taken steps to make signing up and paying online easier, although he didn’t elaborate on what those meaures were.

“It unknown whether that will have a large impact or just be another marginal improvement,” he said.

But unlike Canada, which is on track to reach profitability faster than expected; and Great Britain and Ireland, which are performing well enough that Netflix is planning to launch in a third European country this year, Wells’ optimism about Latin America remained tempered.

“Latin America is growing. We’re not losing to a competitor” there, he said. “It’s just not growing as quickly as we expected when we entered the market.”

At the conference, Wells also reiterated Netflix’s intention this year to introduce “family” plans that would enable people in different rooms of the house to stream different shows and also get personalized recommendations. Currently there is one set of recommendations for all members of a family, often frustrating parents who don’t want to watch “Spongebob Squarepants.”

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