Netflix began selling its Internet video service in Cuba Monday in what appears to be a largely symbolic move driven by the recent loosening of U.S. restrictions on doing business with the communist-run island.
The expansion probably will generate more publicity for Netflix Inc. than new subscribers because only a small fraction of people living in or visiting Cuba have the high-speed Internet access needed to stream movies and TV shows.
The audience with fast enough Internet service to get Netflix consists primarily of international executives, foreign media workers and high-ranking government officials. Many more Cubans have access to relatively fast internet connections if they work for state businesses authorized to have the service, but their online activities are monitored. Streaming videos at work is among the activities that could trigger disciplinary action.
Most Cuban incomes are meager, too, making Netflix's $8-per-month service an unaffordable luxury for most of the island's 11 million residents. A ban on making U.S. payments also remains in effect, requiring anyone in Cuba who wants to subscribe to Netflix to set up an international payment method.
Credit card use by Cubans is virtually unknown, though both MasterCard and American Express recently announced plans to begin processing payments by their U.S. card holders while visiting the island.
Despite those obstacles, Netflix evidently wants to establish a toehold on Cuba now with the hope that Internet service will improve, household incomes will rise and diplomatic relations with the U.S. will continue to thaw. Moving into Cuba isn't likely to cost Netflix a significant amount, given that the Los Gatos, California, company already has been programming for Spanish-speaking audiences since expanding into dozens of Latin America countries in 2011.
Netflix now has more than 5 million subscribers in Latin America, accounting for nearly 10 percent of its 57 million customers worldwide. About 39 million of those subscribers are in the U.S, but Netflix is now experiencing its fastest growth internationally.
Things have been going so well internationally that Netflix CEO Reed Hastings plans to complete the company's expansion outside the U.S. by the end of next year. By then, Netflix expects to be streaming in 200 countries, including China, if the company can get the necessary approvals.
Investors apparently don't view Cuba as a particularly promising market for Netflix. The company's stock dipped 85 cents to $443.51 in afternoon trading Monday.
Only about 27 percent of Cuba's population currently has access to the Internet, according to Internet Live Stats, which uses information from the International Telecommunication Union, the United Nations and the World Bank to estimate the world's Internet users. Another estimate by the group Freedom House puts Cuba's Internet availability at just 5 percent of the population.
Much of Cuba's Web surfing occurs in hotels or government internet centers with connections too slow to stream videos. That kind of access typically costs $4.50 per hour or about a quarter of the normal monthly wage. Most Cubans currently use the Internet time to email friends and relatives abroad.
Hundreds of thousands of Cubans entertain themselves by sampling a wide range of U.S., Spanish and Latin American films and television series copied onto DVDs and USB memory drives. The pirated content makes it possible to watch an entire season of a TV series for as little as $1.