Netflix, Inc. (NASDAQ:NFLX), in a letter to investors Monday, revealed that soon it will come up with a physical gift cards in “select stores” in the U.S., Canada, Mexico and Germany. The streaming video service presently operates in over 40 countries.
Gift cards serving dual purposes
The gift card will serve two purposes. Apart from using it as a gift, it can also be used to pay for Netflix subscription without using a credit card. In fact, the image of the gift card printed on the investor letter, showed the phrase “no credit card required.”
According to Netflix, the card will help the company to further extend its brand presence in mature markets, along with making it easier to access the service. And, in the new markets, the gift cards will help in building a brand and “provide an easier alternative for consumers to join Netflix in markets with developing online payments.”
It’s a smart marketing move from Netflix making its gift cards displayed at the grocery store alongside those of Starbucks and iTunes, in the U.S. and Canada. In newer markets like Germany and Mexico, the new feature will provide users more options to pay for their favorite shows.
Mexico a tough market for Netflix
In Latin America, Netflix has been witnessing a slow subscriber growth, and much of this has been blamed to the payment issues, as the region has limited use of credit and debit cards. On Monday, also, founder and CEO Reed Hastings referred to the “tremendous payment complexity” in Brazil.
No details over the roll-out in other countries have been announced, but it expected that Mexico will be a tough market to crack. Even though Mexico is the second-biggest region in Latin America, only one-fourth of the population has a bank account.
Julija Jurkevic, a global research analyst at SNL Kagan, told The Huffington Post “Latin America is one of the tougher markets for digital commerce.” Jurkevic expects Netflix to introduce gift cards in more regions of Latin America.
As of now, not much detail has been shared by Netflix regarding the stores where the cards will be available and the denominations of the cards. However, in the letter, a $30 gift card image was noticed.