 LATIN AMERICA | STREAMING |
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| Reed Hastings, CEO of Netflix: "We Try to Not Compete with TV" |
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As Netflix continues to launch its platform in Latin America, the pay TV industry continues to study its potential negative impact. Yet the streaming service could actually be exactly what the sector needs to move forward.
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Beyond the features Netflix's service will have in Latin America, the real question is how it will impact on the region's TV industry. Even though it is still too soon to see any concrete results -the service ends its week-long launch on September 12- players are still calling meetings to deal with the "Netflix issue" and to discuss the best way to face the new competitor.
During the press conference held on Wednesday, September 7 at the Park Hyatt Palacio Duhay Hotel in Buenos Aires -which ttv attended- the CEO of Netflix, Reed Hastings, did his best to calm down an industry that seems to be having a hard time believing or trusting him. "Is this the end of cable? Is this the new way for TV?" he asked the journalists in the room. "The answer is no. Netflix is a complement to existing cable and satellite, which have news, have sports and a very broad selection. Netflix is only movies and TV shows." And to make his point even clearer, he pointed out that despite Netflix having grown to 25 million households in the US, "cable and satellite have also continued to grow," a statement that holds some truth but hides a reality that's a little bit more complicated than that.
But the CEO did say that Netflix tries to not "directly compete with the main TV networks. We do not have the current season of shows; we have the prior seasons of shows. And that is part of why many people subscribe both to cable or satellite and to Netflix." In fact, and considering that movies will become available on the platform one year after their theatrical release, this only goes to show that the online streaming service will have a hard time conquering a Latin American audience that is very used to not paying.
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STRANGE ALLIES AGAINST PIRACY
"One of the challenges for Netflix and all of paid services like Telefónica is the existence of piracy because it is very inexpensive for a consumer to use a site that has a lot of piracy," Hastings said during the conference, where the role of Cuevana -a borderline illegal free streaming service in the region- was constantly undermined and disregarded. "But, nevertheless, what we found is that if we offer a great service where you don't have to install software and it just streams, and when you need it on Friday night and Saturday night it really works all of the time, then there is a market willing to pay for that," he quickly added.
Even though piracy rates do drop once users have a cheap and legal alternative in markets like the US, it's hard to imagine that Latin American consumers will follow the same path. 'Convincing' US consumers took companies years of advertising, mostly thanks to the public debate driven by the music industry. The same discussion is still in its early stages in Latin America and speeding it up could prove to be quite difficult.
But, who knows? Maybe Netflix will be the catalyst that Hollywood studios need to apply the weight of the law over Cuevana. And it would definitely be amusing if Netflix ends up helping the local pay TV industry instead of rising as the monster everyone fears it will become.
AN UNCERTAIN FUTURE
Today, the mass hysteria spread among pay TV operators -and some broadcast TV players- is still expressed in whispers behind fake smiles and nobody really knows what will really happen. And nobody means, well, nobody: even Hastings isn’t sure about how the company will do in the region. "We are expanding around the world and in Argentina with a longer-term view. How fast will we grow in the first year is unknown," he said. He mentioned broadband penetration, the amount of people with credit cards and appealing content as the keys that'll determine the service's success in Latin America.
Yet once the cameras were turned off, he confessed to ttv that the company is expecting to break even in the region in about two years. Two years is not very long when considering the big picture, but it's enough time for operators to concoct their own survival plans. And probably the best advice is given by Hastings himself, when talking about how Netflix will strive to succeed in the region: offer a great service that is worth paying for. It's as simple as that.
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Where Everything Grows
