September 12, 2011 / 6:15 PM / 8 years ago

Netflix sees profitability in Mexico in two years

* Says same U.S. catalog available in Latam

* Rivals in the region include Telmex’s TV Online

By Cyntia Barrera Diaz

MEXICO CITY, Sept 12 (Reuters) - U.S. online video rental service Netflix Inc (NFLX.O) said it would take two years until its Mexico operation, which it launched on Monday, can entice enough clients to turn a profit.

“We are going to lose money for a while ... it will take a lot of subscribers to get to profitability,” Chief Executive Reed Hastings said at a news conference.

Hastings declined to estimate how many clients the company would acquire during its first year of operations in Mexico, Latin America’s second-largest economy.

He said the U.S. content catalog, except for a few productions, would be available across the region.

As for broadband problems — Mexican users on average run at 2 MB, though much faster speeds of up to 50 MB are available — Hastings said if a Youtube video download is performed with ease on a computer, then Netflix will work fine.

The company has close to 23 million subscribers in the United States, of which nearly two-thirds stream videos.

Netflix, which is launching in 43 Latin American and Caribbean countries, will face some competition in the region, including Mexican tycoon Carlos Slim’s Telmex TV Online, currently available in Colombia.

Slim’s Telmex TELMEXL.MX TMX.N, whose bid to to offer television services in Mexico was recently rejected by the government because of competition concerns, has a strong operation in other Latin American countries.

Colombia has been one of its fastest growing markets and customers there, unlike in Mexico, can buy packages bundling television, broadband and phone services.

Netflix, which will lose Starz Entertainment movies and television shows in early 2012, will charge $8 for the monthly subscription in Mexico. Hastings said the price should remain low to make it attractive while the company builds a client base.

Local broadcasters TV Azteca TVAZTCACPO.MX and Televisa TLVACPO.MX (TV.N) will make some of their soap opera and series content available through Netflix in Mexico, he said. (Editing by Steve Orlofsky)

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