28 (Continued on Page #) January 2014 after their release, with a service similar to a VoD Premium (charging an added fee on top of its $8 subscription fee). Reportedly, Netflix moved into theatrical day-and-date releasing because it hasn’t seen as much success with its films as with its original TV programming. This is despite its Cinematch, a system that makes recommendations about which movies customers are likely to enjoy. Currently, theaters play movies at least 90 days before any other platform and they reportedly could be persuaded to reduce it to 45 days since 96 percent of a film’s box office is achieved in its first 42 days. However, there will be resistance from hotel-based VoD services (where new movies are shown 45 days after theaters), and services such as iTunes. And all of these plans are taking place in to include pre-paid credit cards for people who don’t own credit cards — the way Apple does with iTunes — and offer affordable prices. In the Dominican Republic, for example, the fee for Netflix is considered a good deal, since renting a movie costs 150 Dominican pesos, while a month of Netflix is 300 Dp. It’s also a good price in Brazil, considering that a pirated DVD costs R$5, and Netflix is R$14.99 per month. Naturally, viewers have to add Internet charges to the monthly fee, which in Brazil is an additional R$60.00 for 10Mbps. In the past, LATAM programming consisted of original-language shows with subtitles, as well as some dubbed when possible. Now however, Netflix is increasingly demanding dubbed programs from suppliers while it is renegotiating old contracts to include cable rights. To achieve this goal, industry observers cite the fact that the two top execs at Netflix LATAM, Jessica Rodriguez and Pablo Corona, both come from the cable network industry. Several TV program distribution executives paint the picture that, up until recently, Netflix requested exclusive SVoD rights, in all languages, and most rights granted for LATAM were Internet streaming only (no permanent downloads). If a dubbed version was not available, Netflix would dub or subtitle it themselves. Plus, they covered digital delivery costs. Now, Netflix is trying to include more territories under one deal, extend their rights and, for LATAM, they are requiring Spanish and Portuguese dubbed versions. Moreover, files need to be digitized and sent, which adds more to the costs, thereby often rendering the deal a loss. Also, the monies they are offering are less than before. However, some content distributors reported that, at times, Netflix offers performance-based deals in addition to their traditional flat license fee. But LATAM is not the only challenge for Netflix. Entering France, for example, is proving problematic due to the resistance of the powerful theatrical exhibitors that will not allow for the reduction of the SVoD window to go below 36 months. Plus, French laws require that SVoD services allocate 21 percent of their annual revenue toward investment in local and European films, and that they pay a sales tax of 19.9 percent. Similar problems are also found in Singapore. Originally, Netflix’s DVD-bymail business competed with the midst of a global expansion strategy that currently gives Netflix 40.4 million subscribers in 41 countries, of which 20 are in Latin America (Cuba excluded), a region Netflix entered in 2011. The growth inLatinAmericahas been slower than expected, but given the expected improvement in payment systems and low pay-TV penetration, Latin America is expected to be an important market in the future. According to some analysts, if Netflix can achieve a penetration of five percent of Latin American HH over the course of the next six years, it can gain close to seven to eight million subscribers. Although broadband penetration and speeds are still low, they will increase over the next few years. Payment issues have also hindered Netflix’s growth in the region, but the company is trying to simplify the payment system, possibly www.neweumarket.com + 385 1 641 8621 nem@neweumarket.com Join us for NEM 2014! A market with a breathtaking view for global media industry experts Netflix’s Magic in LATAM (Continued on Page 30 (Continued from Cover)
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