Netflix strikes first and grows like never before in Latam

Netflix saw record growth in Latin America in Q4 2023. It achieved a 5.4% quarterly increase in subscribers, something it hadn't done since 2020 during the pandemic. The last quarter also marked an exceptional year in which it managed to return to double-digit year-on-year growth and add more than 4.3 million accounts. Behind the success are the new plans with lower prices: Ad-tier and, mainly, account sharing crackdown. The SVOD market in Latam ended 2023 with 114.3 million accounts, and Netflix remained the leading platform in terms of subscribers. It led the segment with 40.25%, just below its share in the previous year. This stability is not insignificant, as Netflix lost 35 points of share between 2019 and 2022 with the entry of the main international platforms. Latam is a highly concentrated market, with only four groups (Netflix, Disney, Amazon, and WarnerBros.Discovery) holding 82.4% of subscribers. In 2023, Netflix launched two new plan segments. On the one hand, it introduced a low-cost plan with advertising, Ad-tier, in Brazil and Mexico. Although it was rumored that it could extend this option to three other countries in the region in 2023, this option was redefined globally and the territorial expansion over South America was stopped. However, in Q1 2024, it appears that the decision will be to move forward strongly. In Brazil, for example, the ad-tier option has been promoted as part of Claro TV packages. The country's largest Pay TV operator will include this Netflix plan by default for all its Pay TV OTT customers, gaining a volume of nearly 800,000 households, according to Dataxis estimates. Netflix has few commercial alliances, but they are with the largest operators, which does not rule out the possibility of opting for an associative model to achieve critical mass and consolidate the advertising-based model. According to Dataxis, by 2023 Netflix's Ad-tier will have reached around 1.7 million accounts, a low percentage of the total, but it should be remembered that it is only available in two countries. The ad tier option will also be launched in 2024 by Max, the evolution of HBO Max, and Prime Video, which is expected to create a more robust advertising ecosystem and strengthen the alternative. Although Netflix's account sharing fee has been in place in Latam since 2022, it was only in Q4 2023 that it was rolled out massively across all countries. For years, platforms have been complacent about password sharing. Dataxis estimates that in 2023, for every household in Latam that paid for OTT services, 2.5 others didn't and accessed the service irregularly. Either because they share it in good faith or because they got them on the parallel market: there is an entire industry in Latam...