According to Ovum's soon-to-be-released Digital Consumer Insights 2018:Latin America survey, the most notable change in consumer behavior in 2018 was the growth in adoption of online video subscriptions (Figure 1). Although there are several online video platforms available in the region, Netflix stands out as the clear leader, selected by 89% of respondents. The service's multi-award-winning film Roma is the perfect example of the way in which Netflix is playing a totally different game, both globally and in Latin America.
Roma was a game-changer at this year's Academy Awards. The black-and-white Spanish-language film followed an unconventional casting, shooting, and distribution process. It was the first Mexican movie to receive an Oscar for best foreign film, and star Yalitza Aparicio was the first Mexican indigenous woman to be nominated for a Best Actress award. The film, produced by Netflix, was the first from the digital disruptor to win an Oscar, showing the growing power of streaming platforms relative to traditional movie studios. The film was not accepted to be shown at the Cannes Film Festival, and the decision to include it in the Academy Awards ignited controversy. Roma exemplifies both the disruption Netflix poses to traditional movie studios, and the way in which Latin America is playing a key role in Netflix's success story.
Brazil and Mexico are among the largest markets for Netflix, and according to Ovum's OTT Video Subscription Forecast: Netflix, 2018–23, at end-2023 Brazil is set to be Netflix's fourth-largest market and Mexico its fifth-largest. Understanding that Latin American consumers have an appetite for high-quality productions and exclusive content without advertising, Netflix produced its first Latin American series in 2015 and has added more series and movies every year since. Netflix has just announced that it is opening offices in Mexico, where it plans to produce 50 new series and movies in 2019 and 2020.
Pricing and credit card penetration are limitations on Netflix's growth in Latin America. Netflix is applying several strategies to counteract these issues, such as forming partnerships with various service providers in the region. Its most important such deal is with Telefonica. In terms of pricing, Netflix is experimenting with new subscription types, testing a mobile-only subscription in Malaysia and India for half the price of the basic plan ($3.60). It won't be surprising if we see it use similar models in Latin America, particularly considering that 75% of digital consumers in the region say they watch video services on their smartphone.
Netflix is no longer considered a high-end product in Latin America. It is highly valued by Latin American digital consumers, and they are willing to pay for it.
"On Netflix's quest for 'moments of truth',"CES003-000462 (March 2019)
"When Netflix runs out of steam," CES003-000379 (December 2018)
OTT Video Subscription Forecast: Netflix, 2018–23, CES003-000269 (October 2018)
Sonia Agnese, Senior Analyst Latin America