Disney+, The Walt Disney Company’s subscription-based video-on-demand broadcasting service, has just landed in Latin America. With its incorporation, it expands the range of content already enjoyed by many Latin American countries such as Argentina, Chile, Colombia, Panama, Mexico, Peru, Venezuela, Uruguay, Brazil and Paraguay. There you can access the extensive catalog of films and series from Apple TV, Netflix, HBO Go, Amazon Prime Video, YouTube Premium, Paramount + and many others.
Cuba is a case apart, since it only has Amazon Prime and Netflix at prohibitive prices for ordinary Cubans. They also have their own national service, called Picta, where you can spend the 300 MB of the national Internet bonus, which would give you about 8 minutes in good quality and about 45 minutes in low quality of the Telerebelde, Canal Caribe, Cubavisión and Cubavisión international channels.
With the arrival of Disney+ in Latin America, adding to the already existing services, millions of Hispanics will be able to sit comfortably on the couch and enjoy at any time of the day -and binge-watch without ads-, the complete seasons of “The Mandalorian“, “Cobra Kai“, “Game of Thrones”, “The Boys”, and thousands of series and movies, both current and classic.
Disney+ and Netflix are not enemies
Although many speak in warlike and pejorative terms of “streaming wars“, the truth is that users can enjoy thousands of hours of entertainment at very affordable prices thanks precisely to the strong competition between streaming services on the one hand, and between Internet providers on the other.
As can be seen in their Twitter accounts, Netflix Latin America and Disney+ Latin America know that they are not at war, but rather in a healthy race that helps them to constantly improve in order to satisfy their customers. Everyone benefits from this competition, but especially the audience. Not only because they will have to offer better and better prices, but also because they will have to make an effort to produce higher quality content and innovate by optimizing the technology behind the service.
Many young people did not experience it and some adults perhaps have already forgotten it, but until a little more than a decade ago, the only options for home cinema were either to rent a movie in a video store (Blockbuster being the hegemonic company), or to buy it in video or DVD, costing a single movie what today costs several months of subscription to the entire catalog of digital platforms.
In the book “That will never work: The Birth of Netflix and the Power of Great Ideas” (2019), Marc Randolph, co-founder of Netflix, tells how in 2000, Blockbuster was about to buy the then newly-born Netflix for a derisory $50 million dollars. Its market capitalization in November 2020 is $212.34 billion dollars.
At that time, Netflix was very different from what we know today. It was a DVD rental service by mail. At the beginning of the millennium, when bandwidth was only a fraction of what it is today, Netflix gave customers the opportunity to connect to the Internet, choose several movies, and in a few days the first DVD would arrive at their home. When the first movie was returned, the next one was sent. There were no late penalties, unlike Blockbuster, which did charge fines for this concept.
This new system, still rudimentary, but much more comfortable for the user, intrigued Blockbuster, the giant of movie rental stores, who began to notice slightly how it was losing customers to Netflix. Despite their good idea, Netflix was accumulating losses of $50 million dollars and sat down to negotiate with Blockbuster for a possible acquisition by the same amount.
Blockbuster, in an act of arrogance, refused to buy it and preferred to copy it, setting up a similar service for their clients, which also began to lose money. With the technological innovations, and the increase of the bandwidth’s quality-price relation, Netflix finished making the transition of its business to streaming as we know it today, while Blockbuster stayed doing things as usual. Ten years later, in 2010, Blockbuster announced its bankruptcy.
The history of Netflix and Blockbuster is nothing but the same essence of entrepreneurship, that is, to seek to satisfy the needs of customers in the best possible way and at an optimal cost. Blockbuster thought their product was video tapes and DVDs, Netflix knew that in reality that was just the format, the real value for customers was home entertainment.
There are many similar stories, but one that catches the eye is that of the ice trade industry in the late 19th and early 20th centuries, especially on the East Coast of the United States. It was during this time that large blocks of ice began to be transported, both for industrial and domestic consumption. One of the main losses in this business was that it melted during transportation.
At the beginning of the 20th century two technologies emerged in parallel that could affect this industry, motor cars and refrigerators. Just as Blockbuster thought their business was selling videotapes or DVDs, many entrepreneurs at the time thought they were selling “ice”, and bet on motor cars to make transportation faster and avoid melting on the road. Other entrepreneurs, just like Netflix understood that they were selling home entertainment, saw that what they were selling was “cold”, and won the bet with the refrigerators.