Among the keys to Netflix’s success in Latin America, the decision to establish the prices of subscriptions in local currency played a crucial role. Although this policy exposes Netflix to the volatility of periodic devaluations, it has given it flexibility to better adapt to each country’s Pay TV ecosystem. As a side effect, a low ARPU could be an important element to defend its wide regional dominance.
In the past two years, Netflix has managed to keep its annual regional ARPU at around $ 8.2; that is the lowest value among all the regions in which it operates. That stagnation, in turn, widened the gap with the United States’ ARPU. As of Q1 2020, the difference between the ARPU of the United States and that of Latin America was 39%, its historical maximum. This price delta puts pressure on the new international OTTs that announce future landings in the region, since commercially it would be difficult to charge more than Netflix; by far the dominant actor.
Latin America represents around 19% of Netflix subscribers and contributes 14% of global revenue.