Netflix in Cuba? Don’t get your hopes up

(Netflix)

(Netflix)

As one of the first American companies to take advantage of the president’s recent decision to “normalize” U.S. relations with Cuba, Netflix has recently expanded its video-streaming service to the communist country. But it won’t make much of a difference.

As of Monday, people in Cuba with Internet connections will now be able to use the immensely popular service to view shows such as House of Cards at the rate of $7.99 USD/month, as long as they have an international payment method (there is still a ban on U.S. payments).

Though Netflix already has about 5 million subscribers in Latin America, it is unlikely to add many Cuban subscribers. Current estimates are low for several reasons.

First, the price may be too high for Cubans, whose monthly average salary is only $20, according to the Cuban government. Convincing someone to spend almost half of their month’s income on video streaming as opposed to food, clothing, or healthcare will be close to impossible. It is worth noting, however, that some experts say this number could be a low estimate, as it does not reflect much of the unreported income for those working in tourist industries or government agencies.

Second, it’s difficult to measure credit card use in Cuba, due to the lack of data. This means that Netflix is unable to effectively project how large the market could be.

Finally, internet access is much less prevalent in Cuba than in Netflix’s other markets. A Freedom House report on Cuba says that, at most, 26 percent of Cubans have Internet access – but not the Internet we typically think of. “The vast majority of users cannot access the global internet, but are instead relegated to a tightly controlled government-filtered intranet, which consists of a national email system, a Cuban encyclopedia, a pool of educational materials and open-access journals, Cuban websites, and foreign websites that are supportive of the Cuban government,” said the report. Only 5 percent are estimated to have access to the World Wide Web, and not necessarily at the speeds required for effective streaming. 

Cuba scores poorly on many measures of Internet freedom, everything from “obstacles to access” to “limits on content.”

Investors were also not hopeful about Netflix’s market expansion, as the share price dipped by about .29% after the announcement Monday (the price has since rebounded after an increase in other international subscribers was announced).

Netflix still maintains an optimistic outlook, hoping that this decision will allow the company to reap the benefits from Cuba’s economic growth in the future. The company hopes to add Cuban productions to the streaming service as well.

“Cuba has great filmmakers and a robust arts culture and one day we hope to be able to bring their work to our global audience of over 57 million members,” said Netflix co-founder and CEO Reed Hastings in a statement.

Still, many experts suggest that Netflix’s move is purely symbolic, with no large investment or expected commercial gain – which echoes criticism of the president’s policy change itself.

Published on Opportunity Lives

Advertisements