Netflix Overcomes Brazil Hurdle

In 2011 Netflix launched service in 43 Latin America countries, beginning with Brazil. Expansion into Brazil — the fifth-largest media market in the world, after China, India, the U.S. and Indonesia, was fraught with challenges.

Consumers were less familiar with using credit cards to pay for recurring charges such as over-the-top video. In addition to spotty broadband penetration, the lack of localized content (at the time) on Netflix alienated potential subscribers.

“Brazilians enjoy different things, like UFC and stand-up comedies, while hating telenovelas that are made in other Latin American countries,” former chief communications officer Jonathan Friedland told the Brazilian press.

Long-time Netflix bear Michael Pachter, digital media analyst with Wedbush Securities in Los Angeles, went so far as to predict Netflix wouldn’t make it in Latin America.

“This just won’t work in Ecuador or Costa Rica or even Mexico as it has in the U.S.,” Pachter told the Associated Press. “It’s going to depend on how many households have broadband access and what the quality of the content will be like.”

Fast-forward to the present and Netflix is a shining star in Brazil.

Along with Google’s YouTube, Netflix is the first OTT video choice across all devices, according to new data from IHS Markit. About 28% of respondents claim they turn to Netflix first when looking for something to watch, followed by YouTube at 24%. More than 63% of Internet users in Brazil, between the ages of 18 and 64, had access to Netflix, of which 86% claimed to use the service at least once a week.

IHS says that along with growth in OTT video, the installed base of Internet-connected devices grew by 10%, rising to more than 310 million devices in 2018.

More than 40% of survey respondents said they have a personal computer connected to their primary TV screens, while 35% claim to mostly use their smart TV apps to access video content on their primary TVs.

IHS contends that with on-demand video becoming ubiquitous around the world, and Brazil is no exception.

“The country has been experiencing a significant economic slump in recent years and, like other Latin American markets, Brazil’s legitimate pay TV and OTT subscription video-on-demand (SVOD) service providers have seen subscriptions fall or suffer reduced growth,” Erik Brannon, associate director of research and analysis, wrote in a note.“Laptops, tablets, streaming sticks and other devices increasingly pose a threat to cable TV and other traditional TV services.”

In terms of perceived quality, Netflix and YouTube were significantly ahead of pay-TV providers in the following categories: ease of use, flexibility (i.e., “ability to watch what I want when I want”), largest catalog of content, quality of content, and value for the money.

Although this finding is a victory for OTT providers, Netflix and other OTT video services must focus on local language content to remain relevant in the long term, according to Brannon.

Despite the vast library of foreign content Netflix has to draw upon, the amount of Brazilian and Portuguese content remains minimal, which is why the company is now partnering with local producers to boost local content in its library.

As the Brazilian economy continues to improve, growth in pay-TV households is expected to resume. At the same time, a surge in growth is expected in the OTT market as well.

IHS found that pay-TV monthly average revenue per user (ARPU) can cost five times or more than the monthly ARPU of Netflix. Subscription sharing also seems to be a profound problem in Brazil, since nearly 63% of survey respondents reported having access to Netflix, while Netflix subscriptions penetrated less than 25% of all broadband households.

“Connected consumers in Brazil are interested in viewing content in non-traditional ways, which will put added pressure on traditional content and distribution systems when the economy recovers,” wrote Brannon.



Rachel Whetstone Named New Netflix Communications Boss

Netflix Aug. 27 named Rachel Whetstone as its new chief communications officer, replacing Jonathan Friedland, who was reportedly fired for “unacceptably low racial awareness and sensitivity” following separate uses of the racist “N-word” in company meetings.

Whetstone is responsible for leading communications on a global basis, having held similar positions at Facebook, Uber and Google.

“Rachel is a proven communications leader and a strong addition to the Netflix team,” CEO and co-founder Reed Hastings said in a statement. “Her deep knowledge and international expertise will be invaluable as we bring Netflix and its expanding lineup of original content to an increasingly global audience.”

A graduate of Bristol University, Whetstone worked as a political advisor in the U.K. before entering the private sector. She joined Google in 2005 and served as SVP of communications and public policy at Google from 2010 to 2015. She held the same position at Uber from 2015 till 2017, prior to joining Facebook as a VP of communications last year.


Netflix’s $12 Billion Stock Drop Due to Racism?

NEWS ANALYSIS — The close of Netflix’s first business day (June 25) following the ouster of its communications boss for racist comments saw the subscription streaming video pioneer’s stock lose $12 billion in valuation.

Netflix shares closed down 6.7% — the largest drop since 2016 when it elected not to renew a content license agreement with Epix, the multi-platform pay-TV channel co-owned at the time by MGM, Lionsgate and Paramount Pictures.

To some, the decline reflected short sellers reacting to co-founder/CEO Reed Hastings’ decision to terminate Jonathan Friedland, head of Netflix’s PR team, for repeated racist comments in the workplace.

Hastings, in a June 22 email to employees, attempted to intellectualize his reasons for not terminating Friedland the first time he used the “N-word” in a company meeting reportedly about insensitive words.

“We hoped this was an awful anomaly never to be repeated,” Hastings wrote.

The executive then went on to say that his “privilege” had likely caused him to not comprehend the seriousness of the issue and how offensive the use of the racial slur by “non-black people” is.

“There is not a way to neutralize the emotion and history behind the word in any context,” Hastings wrote.

But does Wall Street really care about social issues, including race?

Starbucks last month closed 8,000 stores in the United States for racial-bias training after two black men were arrested at a Philadelphia store while waiting for a friend — and not buying anything.

The April 12 incident caused a national uproar regarding ongoing concerns about racial profiling (the Starbuck store’s manager called police) and police response. The two men said they feared for their lives when the authorities arrived.

Regardless, Starbuck’s stock went up slightly following the event.

To Michael Pachter, media analyst with Wedbush Securities in Los Angeles, Netflix’s market correction wasn’t directly due to social issues.

Instead, the analyst contends some investors used the episode to cool an overheated stock. Netflix’s market capitalization in May briefly topped Disney and Comcast.

“It has appreciated more than any of big tech this year, so it was a little frothy,” Pachter said in an email.



Netflix Fires Communications Boss for Racist Comments

Netflix has fired communications boss Jonathan Friedland for reportedly “unacceptably low racial awareness and sensitivity” following separate uses of the racist “N-word” in meetings.

Friedland, who had led the subscription streaming video pioneer’s PR team since 2011, was dismissed by Netflix co-founder and CEO Reed Hastings. The latter announcing the move in an employee email – first disclosed by The Hollywood Reporter.

“Jonathan contributed greatly in many areas, but his descriptive use of the N-word on at least two occasions at work showed unacceptably low racial awareness and sensitivity and is not in line with our values as a company,” Hastings wrote.

Friedland’s first use of the derogatory word occurred ironically in a PR meeting about insensitive words. Hastings, in the email, said Friedland apologized after the first occasion.

“We hoped this was an awful anomaly never to be repeated,” Hastings wrote.

Friedland allegedly used the racist term again speaking to two black human resources employees. The second use, which Hastings said he only learned about this week, occurred just days after the first offense.

Hastings attributed his lack of action following Friedland’s first offense to “my privilege” and attempt to “intellectualize or otherwise minimize race issues like this.”

The CEO went on to explain that for “non-black people” use of the “N-word” is unacceptable.

“There is not a way to neutralize the emotion and history behind the word in any context,” wrote Hastings.

Although criticized by some for its lack of black senior executives, Netflix has long sought diversity in its programming. The service recently ordered a third season of “Dear White People,” which deals with racism.

Netflix, which saw its stock top a record $400 per share this week, this year named former Obama National Security Advisor Susan Rice to its board of directors.

It also inked original production deals with former President Barack Obama and First Lady Michelle Obama.