Netflix Expected To Launch Streaming Service In South America

Netflix's domination is about to truly go global. While Netflix has been saying that they will expand internationally in 2011, the company has yet to release any info about which location they plan to target next. While I don't have all the details or know all the specifics, it looks like South America is the next territory that Netflix will launch their streaming based subscription service.

In order for Netflix to expand their business and keep up their current rate of growth, the company needs to enter countries that have a large population capable of getting a 2-3Mbps video stream. While not every country in South America fits that bill, many do, and they have huge populations with large Internet penetration rates:

  • Argentina: As of March 2010 the country had a 64% Internet penetration rate with 26.6M users with an average broadband speed of 3.33Mbps. 
  • Brazil: As of Dec. 2009 the country had a 37.8% Internet penetration rate with 75M users with an average broadband speed of 4.46Mbps.
  • Chile: At the end of 2009 the country had a 50% Internet penetration rate with 10M users with an average broadband speed of 6.62Mbps.
  • Colombia: In mid 2010 the country had a 48% Internet penetration rate with 21M users with an average broadband speed of 4.32Mbps.
  • Mexico: In 2010 the country had a 27% Internet penetration rate with 30.6M users with an average broadband speed of 3.54Mbps.
  • Peru: As of June 2010 the country had a 27% Internet penetration rate with 8.8M users with an average broadband speed of 4.62Mbps.

In 2010, South America had a estimated population of just under 400M with 156M Internet users. Central America had a estimated population of 154M with 38M Internet users. Depending on which territories exactly Netflix launches in, the company has the potential opportunity of expanding into a new market with a combined population of more than 500M users, with just under 200M of them online, with a combined average broadband speed of 3.2Mbps.

From what I am hearing, the new Netflix service is already being tested in certain regions and is expected to launch shortly. Last week, on Akamai's earnings call, the company commented that they had signed a "new" deal with Netflix saying that they, "expect to work closely with them to leverage our globally distributed network to their market expansion." While Akamai has been doing caching of small objects for Netflix for some time, to date, Netflix has not had a reason to deliver content outside the U.S. or Canada. Netflix's new contract with Akamai, which I don't believe to be exclusive, is just another sign that Netflix is about to launch out into International markets very soon.

There are a lot of questions about what type of content Netflix will offer and while I don't know those details, I do know that some content will be in-country and other content will come from the U.S. and be streamed to the new territories. From what I am hearing, it sounds like we should see the new service launch Internationally before the end of March.

* Data on broadband penetration, population and download speeds were compiled from Wikipedia, the US Census Bureau, AMIPCI, ITU, eMarketer and SpeedTest.net

Note: I didn't contact Akamai asking for a comment as I knew they would not be able to give out any information and while Netflix did return my inquiry, they were not willing to confirm or deny anything.

  • esteban

    This is a common mistake made by Americans with the country’s name: It is COLOMBIA, not COLUMBIA

  • Thanks for the catch Esteban, I have corrected it.

  • Francisco

    You must be kidding! The average residential broadband speed in Brazil is much lower than the figures listed.

  • Speedtest.net does a break out of the top 100 countries wit speeds. You can see how Brazil and others are listed here: http://www.speedtest.net/global.php#0

  • What is their plans in asia?

  • I’ve testing a Roku / non geo Netflix account at more than 250 miliseconds away from Level3 / Limelights, and is very frustating when the device get empty the buffer and tell me “adjusting playback rate to match your connection”, even as I have 5 megs at home but too latency to those CDNs…
    If anyone more is interested to come South Telecom Argentina (NYSE TEO) have a very brave CDN offering / skytide reporting included 😉 http://www.skytide.com / http://www.telecom.com.ar.

  • GV

    This “rumor” to say it somehow is being around for a while, and I do know they have been testing.
    I personally believe Netflix will have 2 main issues. One Technical and one non-technical
    Technically speaking, LatAm network is not same as NA. Major CDN have very little penetration on main ISP networks (which are basically Telcos). Very few of them have Akamai servers on-net. Most ISPs in Latam have transit throughput issues. Everything works ok on-net, but as soon as you need to get out; congestion is the common zone. Most Telcos are building their own CDN services to take advantage of On-net capabilities. So, what I’m trying to say is that Netflix will have to work out a lot of particular solutions for each country beyond just Akamai; or leverage Akamai to do so for them; but I can imagine ISP won’t make it easy for Akamai as it’s competition for them and so will be Netflix considering many Telcos in Latam are releasing their own OTT streaming video stores ON-NET (a service for their own users)
    On the non-technical side, the usual problem … The rights to deliver the content. I’m sure Netflix is very trained on this topic, but it will be also hard. Content rights for LatAm is quite concentrated on a couple of content agregator companies, who deal with cable and TV stations and are a gret revenue stream for the studios(rental stores are not a big issue as LatAm is very kind to piracy, unfortunately which can actually easy the deals).
    Cheers

  • Richard

    We are in april, do you know by kwon fi netflix will expand in Colombia Soon?

  • MARC PERETS

    WILL PARAGUAY BE ONE OF THE COUNTRIES THAT NETFLIX WILL BE SERVICING WHEN IT OPENS IT SERVICE IN CENTRAL AND LATIN AMERICA?