February 21, 2019
Brazil has quietly become Netflix’s No. 2 foreign market (after the United Kingdom) since the SVOD pioneer established service in the country in 2011.
With the largest economy in Latin America ($902 billion GDP), Brazil is a hotbed for U.S. multimedia companies doing business south of the border. And Netflix is leading the way in over-the-top video. Netflix Brazil now tops 8.5 million subscribers, with 1.5 million added in 2018, according to according to new data from Futuresource Consulting.
Original Brazilian programing on Netflix includes “The Process,” “The Mechanism,” “Space,” and “Samantha!” among others.
“Consumer spend on SVOD is almost entirely driven by Netflix and accounted for around 8% of total entertainment spend in 2018,” analyst Tanzim Rahman said in a statement. “Beyond 2019, the SVOD market is projected to experience 20% growth in revenue per year, with revenue expected to nearly double by 2022, reaching just shy of $1 billion.”
Netflix’s prospects in Brazil didn’t seem so rosy a year after bowing service. With about 1 million total subs in Latin America a year after launching, Netflix was having trouble convincing consumers to use their credit cards to pay for online service, in addition to reported bureaucratic issues. Viewers also wanted programming with subtitles (instead of dubbing) or the option of audio in Portuguese.
Now, 28% of respondents in a separate IHS Markit survey claim they turn to Netflix first when looking for something to watch on television.
While pay-TV still dominates the Brazilian home entertainment market, representing 77% of consumer spending, that revenue declined 6% in 2018 to $5.9 billion compared to $6.2 billion in 2017, according to Futuresource.
Sales and rental of DVD and Blu-ray Disc content fell 20% — largely offset by digital sales and transactional VOD.
“Despite a choppy ride, the overall video entertainment market will begin to rise again, although it faces another decline in 2019,” Rahman said. “We project a climb [of] retail value to $7.2 billion in 2022.”