Netflix Expanding To Latin America, Caribbean

Netflix Inc. (NFLX) said on Tuesday it will launch Internet-streaming services in 43 Latin American and Caribbean countries later this year, the latest step in the company's plans to expand worldwide.

The Los Gatos, Calif., Internet video company said members in the new region will be able to access U.S., global and local TV shows and movies in Spanish, Portuguese and English. The service allows customers to watch video over a Web connection on computers, mobile devices and TVs connected to streaming devices.

"Netflix members in the U.S. and Canada have really taken to watching instantly," Jessie Becker, vice president of marketing, wrote on the company's blog. "We feel great about being able to offer the same combination of convenience, choice and value to people in Mexico, Central America, South America and the Caribbean."

The expansion is the latest step in Netflix's evolution, which has seen the company grow beyond its roots as a DVD-by-mail service into a leader in the booming field of streaming media. Last year, Netflix expanded its service, which had been limited to the U.S. market, to Canada. At the time, the company promised further international expansion though at a pace it felt it could manage.

"They're going to roll out in international markets faster than investors think," said John Blackledge, Credit Suisse senior analyst, adding the new region provided a substantial number of potential customers. Brazil, Mexico and Argentina alone have nearly 35 million broadband subscribers, compared with 10 million in Canada, Blackledge said.

Investors applauded the move, sending shares to an all-time high of $291.23. In recent trading, Netflix shares were off the high but still up 7.4% at $287.70.

The company also has doubters. A fifth of the company's float has been sold short, meaning that investors are betting shares will fall.

One potential cause of the skepticism: Netflix hasn't commented on the cost of its content deals or what it will charge its new customers, making it difficult to evaluate the potential financial impact of its expansion.

Analysts say costs associated with the new operations will likely dent near-term profit margins, although the company has steadfastly maintained it won't sacrifice profit for growth.

Netflix faces challenges determining pricing and programming in areas with varying cultures and economics, analysts said. It also must cut deals with movie and television companies to determine what it will pay for the right to stream their content.

Founded in 1997, Netflix currently has more than 23 million members. Since 2007, it has concentrated on streaming media, which has lower costs than its DVD-by-mail rental operation.

Blackledge said the number of broadband subscribers, per-capita income and TV usage are among the factors Netflix considers when weighing its entry into a particular market.

In April, the online movie-rental company reported its first-quarter profit soared 87% as revenue jumped 46%.