Bloomberg Línea — Latin America represented the biggest year-on-year growth for Netflix (NFLX) in the second quarter compared to other regions in its geography, the company said in a letter to its shareholders detailing its performance in the period.
The streaming company reported $1.03 billion in revenue, with a Y/Y jump of 16% in Latin America. In UCAN (US/Canada), growth was 10%, with losses of -4% in EMEA (Europe, Middle East, and Africa) and -9% in APAC (Asia Pacific).
In the first semester, growth in LatAm was 14% compared to the first six months of 2021, also outperforming other regions.
Netflix’s revenue in Latin America was virtually flat -- from $999 million in Q1 to $1.03 billion the following quarter. In the first semester, revenue amounted to almost $2.03 billion. The number of paid subscribers in Latin America was flat at 39.62 million in the second quarter (39.61 in the previous period).
In March, Netflix disclosed that it was testing two paid features for account sharing in Chile, Costa Rica, and Peru. On Monday, the company announced that in those countries it will now ask if users want to pay a fee of an unspecified amount to add a new member to the account.
Testing is also being expanded to Argentina, El Salvador, Guatemala, Honduras, and the Dominican Republic, where users will be asked if they wish to pay an extra fee to share an account. The fee will range from $1.70 in Argentina to $2.99 in other countries.
Quizzed by investors after the release of the quarterly results, Netflix COO Greg Peters said the company had been “working with this technology behind the scenes” for the past two years and is now launching the service for testing with Latin American users in five new markets.
Peters explained that the company is testing two models with Latin American consumers.
In the first model, consumers pay to add a new member. In the second model, users pay to add new households.
“At this point, we are starting to see what actually works for users. We are learning a lot as we employ the models. It’s too early to tell, we have started testing the second model now. But I would say that we are confident, based on what we are seeing, to officially launch next year as we are planning,” he said.
Asked how Netflix will know if users are traveling when accessing the account from another location, Peters said one of the reasons the company has been working on this for a while is to build technical capabilities to understand network signals.
“It’s to be a user-friendly model that supports cases like travel, different devices, but also making sure that we’re doing a good job being paid. The models are different and we are figuring out what will work best,” he said.
Pay to share account is one of the alternatives Netflix is testing to monetize the service, alongside a version of the streaming platform with adverts.
In the second quarter, Netflix lost fewer subscribers than it expected, much on the back of the success of the Stranger Things series, in what CEO Reed Hastings attributed to “less bad results”.
Still, “losing a million subscribers and calling it a success is tricky,” Hastings acknowledged during the investor videotaping.
The company also said that every recession is different and is closely monitoring the macroeconomic scenario, but was optimistic about the unit economics of new forms of monetization, such as advertising. According to Netflix, companies are interested in advertising on the platform and want to associate themselves with successful streaming titles.
Netflix expects advertising to represent a small fraction of revenue at first, but that it will grow over time.