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Netflix Finds a New Market

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Netflix Finds a New Market

July 17 2015, 06.35am GMT

STOCK.com

While engaged in efforts to offer local programming to international subscribers, Netflix inadvertently discovered a huge potential domestic market that might prove disruptive to Univision’s IPO prospects.

Netflix (NFLX, +18.2%) executives revealed in an interview on Wednesday that as part of its international drive to attract subscribers, it had acquired programming from Latin American sources in order to expand into that market. Commenting on this initiative, Netflix content chief Ted Sarandos said, “We’ve licensed a lot of programming from Latin America into the U.S. and are getting incredible viewing on shows that were successful for us in Mexico that are now drawing huge numbers in the U.S.”

Sarandos added that the demographic differs extensively to that which they have targeted before yet despite this; Netflix is getting hundreds of thousands of viewing hours a day on single shows.

Meanwhile, Univision, which has filed papers for an IPO, has an exclusive agreement which lasts until 2030 with Mexican based Gruppa Televisa SAB, the biggest global producer of TV programming in Spanish which airs around the world. Univision’s access to its viewing clients is based on the traditional television model which has been popular for many years.

Netflix, on the other hand, has its main focus on streaming to mobile devices which is targeted at a younger viewership more inclined to modern hi tech devices rather than to television.

Figures extracted from the 2010 U.S. Census Bureau data revealed that Hispanic children made up 1 in 4 of all children under ten in the U.S. at that time. The census also revealed that 20% of U.S. residents between the ages of 10 and 20 are Hispanic. The 10 to 20 age group of 5 years ago are the current potential Hispanic clients’ pool that is in Netflix’s sights. The current Hispanic population in the U.S. is estimated to have grown to 55 million. Further estimates are that 60% of Hispanics in the U.S. are under the age of 34 which means Netflix has a potential target market of 32 million viewers.

In addition to the full length films being produced in English by Netflix, it is also producing its own original Spanish-language programming. The company advised in its earnings report on Wednesday that it will launch its first non-English original program in the near future. A Spanish language sitcom titled “Club de Cuervos” by Mexican filmmaker Gaz Alazraki which focuses on a family that owns a soccer team will launch on 7 August.

The varied population groups that make up the citizenship of the U.S. has not gone unnoticed by Netflix following the Hispanic revelation and future programming aimed at foreign viewers will also target local residents from the different groupings.

Referring to that possibility Ted Sarandos said, “As we add local programming into those territories, we’ll be able to find audiences for that around the world on Netflix. So I think we’ll be able to find scale on local programming as well.”

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