Bloomberg News

Netflix Faces Fresh Competition in Mexico

November 30, 2012

Netflix Inc. (NFLX:US), the world’s biggest video-streaming service, faces fresh competition from America Movil SAB (AMXL), the largest mobile-phone company in the Americas, which is introducing a rival service in Mexico today.

The new offering, called Clarovideo, will be available at a cost of 69 pesos ($5.30) a month, America Movil said in a statement. The company already offers a similar service in Colombia, Argentina, Paraguay and Uruguay, letting viewers watch television shows and movies over an Internet connection.

The move puts more pressure on Netflix in a region that the U.S. company sees as one of its biggest avenues for growth. Netflix, based in Los Gatos, California, began selling streaming subscriptions in Mexico last year for 99 pesos a month. Joris Evers, a spokesman for Netflix, said the market is large enough for more than one service.

“There will be many players,” he said. “We want to be the best at it and be a great option for consumers. People will likely subscribe to multiple services, though.”

America Movil’s Uno TV unit already provides free online programming, including news, sports and special events such as an annual arts festival in Guanajuato, Mexico. The television industry in Latin America has voiced concerns about America Movil’s push into the market, given the company’s dominance in phone and Internet service.

Regulatory Questions

Emilio Azcarraga, the billionaire chief executive officer of Mexico’s biggest broadcaster, Grupo Televisa SAB, called for regulatory scrutiny of online broadcasts last year, and TV Azteca SAB filed a complaint against America Movil with the Mexican Federal Telecommunications Commission. The agency hasn’t yet addressed the complaint.

America Movil fell 1.2 percent to 15.28 pesos at the close in Mexico City, where it is based. Netflix gained 0.4 percent to $81.71.

Netflix faces a different kind of challenge at home, where activist investor Carl Icahn has lobbied for the company to put itself up for sale. Netflix adopted a so-called poison pill on Nov. 5 to defend against a hostile bid. The following week, CNBC reported that Icahn was reaching out to potential buyers.

Netflix remains the dominant provider of streaming video. It captured 33 percent of prime-time Web viewing based on Internet traffic in September, eclipsing Amazon.com Inc., Hulu LLC and Time Warner Inc.’s HBO Go by a multiple of at least 18, according to a report this month from Sandvine Inc.

To contact the reporters on this story: Crayton Harrison in Mexico City at tharrison5@bloomberg.net; Cliff Edwards in San Francisco at cedwards28@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net; Anthony Palazzo at apalazzo@bloomberg.net


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