Netflix, the internet video streaming service, is facing tough competition from a rival Mexican service.
Clarovideo, which was launched today in Mexico, has been created by America Movil SAB de CV (NYSE:AMX) – the largest mobile-phone company in the Americas. The launch of Clarovideo was announced by Telcel, the Mexican arm of America Movil.
The company stated that the new service will be available for 69 pesos ($5.30) per month. The company already offers a similar service to Clarovideo in other countries, including Colombia, Argentina, Paraguay, and Uruguay.
For the cost of their monthly subscription, users can watch as many TV shows and movies as they like over their Internet connection. Clarovideo has undercut the cost of a subscription to Netflix, Inc. (NASDAQ:NFLX), their main competition.
Netflix, Inc. (NASDAQ:NFLX), a Californian based company, began offering streaming subscriptions in Mexico last year, at a cost of 99 pesos ($7.99) per month. There are also other tiers to a Clarovideo subscription, which can be upgraded to include top movies from 49 pesos ($3.70) or standard movies from 19 pesos ($1.50).
The new Mexican video service could provide some stiff competition for Netflix in an area that it considers essential for new growth. Clarovideo is quickly becoming available in more countries, and could be problematic for Netflix if its services and subscriber base continue to grow.
There are plans for Clarovideo to cover all of Latin America by the end of 2013, and it will be launching in Brazil in the first quarter of 2013. Telcel’s director of Added Value Services and International Roaming, Marco Quatorze, said: “We will have [Clarovideo] in all other countries [where we operate].”
“There will be many players,” said Joris Evers, a spokesman for Netflix, “We want to be the best at it and be a great option for consumers. People will likely subscribe to multiple services, though.”
There are already a number of similar services in Latin America, including a recent partnership between Total Movie and Sony, who plan to offer live TV and billing plans for the region.
Yesterday, shares of Netflix, Inc. (NASDAQ:NFLX) fell one percent to $81.38. America Movil rose 0.7 percent to 15.46 pesos. Netflix is still the dominant player in the online video-streaming market, capturing 33 percent of prime-time web viewing in September, based on internet traffic – more than Amazon.com, Inc. (NASDAQ:AMZN), Hulu LLC, and Time Warner Inc. (NYSE:TWX)’s HBO Go by at least 18 times, according to a report by Sandvine Inc.