Business, Economics and Jobs

Could Netflix beat cable TV in Latin America?

Nexflix's decision last week to expand its global reach generated a lot of excitement.

The movie and TV streaming subscription service will soon be available in 43 countries in Latin America and the Caribbean, a big move for a company that so far has only spread to Canada.

Of course not everyone is confident the company can continue its rapid growth. Bret Jensen at Seeking Alpha points out that it faces increased competition and will have to spend heavily to penetrate the Latin American market.

But Ryan Lawler at GigaOM makes an interesting argument that Netflix could beat cable TV in Latin America:

In the U.S. and Canada, Netflix has largely positioned itself as a complement to existing pay TV services. With its great Latin American adventure, it may have the opportunity to not just supplement pay TV, but to replace it in that region. The combination of low pay TV adoption, as well as growing broadband penetration, means that Netflix could become the primary subscription video service that many Latin American consumers pay for.

Citing a research report by Goldman Sachs, Lawler writes that less than a quarter of residents in Latin America pay for cable or satellite services, compared to about 90 percent in the United States. In some markets — including Brazil and Argentina — broadband penetration is greater than TV adoption.

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