Netflix is quickly proceeding with its Latin America rollout this week, giving consumers in Paraguay, Uruguay and Argentina access to the service on Wednesday after launching in Brazil on Monday. Judging from previous experiences in the U.S., the company’s success in these countries could be closely tied to the availability of its service on connected devices. So how popular are these devices in countries like Brazil?
80 percent of all Netflix traffic is device-based
The relationship between Netflix (s nflx) and connected devices has always been somewhat symbiotic. Netflix has profited greatly from being available on game consoles, media players and connected TVs, which has made the service appealing to users who wouldn’t watch long-form content on their small laptop screens. The evidence for the popularity of watching Netflix on the TV screen is in the numbers: Only about 20 percent of all U.S. Netflix traffic comes from PC-based video viewing these days, according to traffic management company Sandvine. All in all, Netflix is now available on more than 450 mobile and connected devices.
The problem is, most of these devices aren’t readily available in Latin America. Apple (s AAPL) doesn’t sell its Apple TV to consumers in Brazil, and Roku’s media player isn’t available outside the U.S. either. Granted, this could change any day (Roku declined comment when asked about its plans for markets outside the U.S.), and having Netflix available in Brazil and beyond definitely helps to make the case to bring devices like the Apple TV there as well.
Boxee & Co. too expensive in Brazil
Consumers will likely have to deal with another issue: Pricing. The Boxee Box by D-Link does sell in South America, but a Boxee spokesperson had to admit it’s not a very appealing value proposition to local consumers. “Unfortunately, due to large import tariffs and taxation being a lot higher, the cost of the device is much higher than locally in the States,” we were told via email. How much higher, you ask? The popular local online retailer Submarino.com.br currently lists the device for R$ 899. That’s about $544 USD, compared to a retail price of $199 when bought in the U.S.
Western Digital (s WDC) announced earlier this week that its WD TV Live Plus media player will offer consumers in Brazil access to Netflix, and the company’s director of business development called the device “one of the most affordable ways for Brazilian consumers to enjoy Netflix on their televisions.” Mind you, the MSRP for the device is still R$499, which makes it about $100 more expensive than MSRP for the same device sold in the U.S.
Gamers left out in the cold?
That leaves game consoles like the PS3 (s sne) and the Xbox 360, (s msft) which have proven to be extremely popular among U.S. consumers for accessing Netflix content. Together, those devices make up around 55 percent of all U.S. Netflix traffic, according to Sandvine. A Sony executive estimated late last year that gamers in Brazil had bought around 750,000 PS3s and 300,000 Xbox 360 consoles, but others believe the actual ownership numbers are much higher. “I find these numbers conservative, and believe there might be many more units, especially considering units purchased through parallel importation,” I was told via email by Ronaldo Lemos, a well-known Brazilian copyright and technology expert.
However, Netflix faces some challenges tapping into that user base, explained Lemos:
“Many of the users prefer to register their units in the U.S. (using a fake address) so that they can benefit from the U.S. services, which are better than the local version of Xbox live and the PS3 network.”
Netflix is closely tied to Xbox Live and the PlayStation Network, a fact that led to weeks of service interruption for some Netflix users after Sony took the PlayStation Network offline earlier this year. Brazilian users who pretend to live in the U.S. to gain access to the stateside versions of these networks likely won’t be able to download the local Netflix app, making it impossible for them to access the service.
Early tests indicate PS3 users may still be able to access local Netflix accounts even when accessing the U.S. PlayStation Network, according to Lemos, but he was able to confirm for us that this isn’t possible with the Xbox:
“If your device is registered in the U.S. (most of them), the Brazilian account does not work. If your device is registered in Brazil, there isn’t even a Netflix application available for you.”
This doesn’t mean Netflix customers in Latin America won’t some day be able to access the service through the game console or connected device of their choice. However, for Netflix, the current absence of thee options it could prevent a perfect storm, and slow the growth of its streaming service south of the U.S. border.
Image courtesy of Flickr user riczribeiro.