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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.