Netflix Goes South

After a successful taste of international expansion by heading north to Canada last year, now Netflix (Nasdaq: NFLX  ) is going in an entirely different direction.

The fast-growing video smorgasbord service is trekking south to Latin America, but that's not the only way that Netflix is moving in a different direction. Instead of simply launching its streaming plan in a single country, Netflix will be rolling out its cloud-based platform later this year in 43 different countries and island nations throughout Latin America and the Caribbean.

This is pretty big -- as in Carmen Miranda headdress big -- news.

We already knew that Netflix was setting its sights overseas. It has been bracing investors for $50 million to $70 million in losses during the second half of the year, as it plans to launch in one international market later this year, and a second market early in 2012. However, analysts seemed to have narrowed their expected targets down to Brazil and the United Kingdom. Few expected Brazil's expansion to include Mexico, Argentina, Barbados, and dozens of other countries.

Does this mean that we're not just getting the United Kingdom next year, but rather a heartier push into all of Europe?

Stay tuned.

In the meantime, couch potatoes to the south can expect to access Netflix in Spanish, Portuguese, or English when the service rolls out in the coming months. This morning's press release didn't serve up details on pricing or on how deep the licensed catalog will be, but it probably won't stray too far from the monthly $7.99 equivalent that Netflix charges for its disc-less streaming plans in the United States and Canada.  

Bloomberg reported back in May that Netflix was in talks with Disney (NYSE: DIS  ) , Lions Gate Entertainment (NYSE: LGF  ) , and Viacom's (NYSE: VIA  ) Paramount for Latin American streaming rights on their older titles, though it will take more than that for Netflix to take off. DIRECTV (Nasdaq: DTV  ) enjoys over 5.8 million satellite television subscribers in Latin America; the pricey mini-dish platform is a hit because it gives users a broader array of content than most local providers. If Netflix wants to succeed as an import, it will have to be with more than old Herbie the Love Bug flicks.

Investors will need to be patient. Netflix is on track to make its Canadian expansion profitable by the end of its first year there, but profitability probably will get harder to achieve as it takes bigger bites in faraway markets.

Aggressive expansion is the right approach. Amazon's (Nasdaq: AMZN  ) LoveFilm is already streaming in Europe. Approaching the world as if it's a Risk board game by conquering continents quickly is the best way to avoid settling for second place.

Is Netflix biting off more than it can chew in Latin America and the Caribbean? Share your thoughts in the comment box below.

Longtime Fool contributor Rick Munarriz has been a Netflix shareholder -- and subscriber -- since 2002. He's been a Disney shareholder for even longer. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

Motley Fool newsletter services have recommended buying shares of Walt Disney, Netflix, and Amazon.com. Motley Fool newsletter services have recommended buying puts in Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On July 05, 2011, at 12:57 PM, David369 wrote:

    Wow. Nothing like thinking big.

    To heck with wearing the aluminum foil hats so the aliens don't take over our thoughts. Netflix, Coke and McD's are going to take over the world so it doesn't matter what we think anyway.

  • Report this Comment On July 05, 2011, at 1:13 PM, verylargelarry wrote:

    Where have you gone MKArch???

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