Following a report last week that Netflix plans to expand its operations into other nations, Cuba appears to be near the front of the line. At issue, though, is the fact that most of the people inside of Cuba will be unable to pay for the service, if they can access it at all.
Inside of the Island nation, only about a quarter of the total population has access to Internet of any kind. To make matters worse, Internet speeds only reach 1.38 Mbps on average, which means that most of the population isn't even in a position to take advantage of the service.
A bigger issue arises when you consider the average income per citizen. Netflix plans to charge the same $7.99 per month rate in Cuba as it does inside of the United States. However, the average monthly income in Cuba is only the equivalent of $20 USD. Asking the Cuban people to pay 40 percent of their income is likely more than they can afford (and that's on top of what they have to pay for Internet service.)
To take advantage of this situation, several startups are offering Cubans access to the Internet at a rate of $4.50 per hour. But for someone who really wanted to try out the service, they could easily run through a full month's paycheck while watching one of the Lord of The Rings movies on Netflix.
Given how limited the potential customers are inside of Cuba, one really must wonder why Netflix would choose to expand there so quickly. It's nothing like the ideal market in Japan, where nearly the entire population has the potential to become a customer.
Netflix is, however, playing a game for the future. Although right now most Cubans won't be able to use Netflix, the company expects that conditions will improve in the future, and the service will become more affordable. By branching out to Cuba first, Netflix ensures that it becomes the dominant video streaming service in the future.
"We understand there are short-term limitations but hope that over time Cubans will be able to enjoy Netflix access," a company representative told Tom's Hardware. "We've said we plan to be global by end of 2016, and Cuba was the only country in the Western Hemisphere where we couldn't operate legally."
In addition, according to the CEO of Netflix, Reed Hastings, Cuban media is also influential in its decision. "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 Hastings.
If Netflix is successful in making a deal to bring original Cuban media to the world, it adds all the more value to the service for having unique content not available anywhere else.
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