“The impediment to action advances action. What stands in the way becomes the way.”
In 2011, the lure of owning the Brazilian market must’ve been enticing to Netflix. For good or bad, Brazil is the beating heart of South America’s economy. It’s an enormous country that sets the trends for a whole continent. Brazil also has a huge smartphone penetration, along with a love of T.V. dramas – every night, about 42 million people watch a drama from ‘Globo’ a conglomerate of media companies that controls the market.
From the outside, it looks like a market ripe for streaming disruption. So the strategic decision was made – Netflix wanted to grab Brazil before another service could get there.
But often, as the old military saying goes, the map doesn’t match the territory. What appears to be from the outside isn’t always the reality once you start delving a little deeper.
Very quickly, Netflix found itself encountering problems. (This brilliant article does a great job outlining them.)
Local audiences at first met the company with skepticism, bafflement, or indifference. Few people were signing up, and those who did were hardly watching. The problems started unravelling very quickly. Brazil in 2011 had poor quality internet, even in the big cities. Mobile signals were at best 3G and plans throttled customer for streaming over their low data limits. The infrastructure was poor.
At the same time, people didn’t have the hardware in their homes to stream. Modern T.V.s with wireless connectivity were a luxury, and thus most families who did watch Netflix, did so on poor quality laptop screens.
And to compound matters, Brazilian young people, the very cohort who were crying out for the service, tended not to have credit cards to pay for it. Those who did have credit cards were often reluctant to hand over their information to a company they didn’t know.
Brazil had become a strategic quagmire. A black mark on Netflix’s rapid global expansion. Something had to be done.
In his brilliant book on stoicism ‘The Obstacle Is The Way’, Ryan Holiday describes the power of seeing barriers and problems as opportunities. Mixing the teachings of Roman emperor Marcus Aurelius with modern business, leadership and war stories, Holiday outlines how blessings and burdens are not mutually exclusive, how our perception is often the thing that’s holding us back, and how great men and women see impediments as chances to grow rather than the end of the road.
By focusing exclusively on what’s within our power, seeing things through a different lens and understanding that every scenario is potentially malleable, we start to realise that problems are rarely as bad as we think. Or rather, they’re exactly as bad as we think.
Many people perceive stoicism to be a rigid, pessimistic outlook on life. Holiday makes the case that it’s actually the opposite. It’s infinitely elastic. It provides us with the opportunity to evolve when something goes wrong.
And that’s what Netflix did.
They weren’t discouraged that their efforts were being hampered by factors seemingly beyond their control. They didn’t give in and waste the billions of dollars that had already gone into the Brazilian experiment.
They accepted, adapted, ‘controlled the controllables’. They saw what many companies would see as a huge negative as an opportunity.
To improve connectivity, Netflix invested in web servers around the country, and teamed up with telecommunications giants such as Telefónica, which were in the process of introducing high-speed broadband nationwide. Netflix supplied the companies with additional servers at no charge, meaning they got what they wanted, the telcos got an opportunity to offer the service to their customers, and of course Netflix got to piggyback on existing relationships.
To fix the hardware problem, Netflix took another partnership approach, this time with Asian consumer electronics manufacturers, offering them a great opportunity to sell more smart TVs in Brazil. Of course, this too was win-win, as Netflix came bundled on all new T.V.s sold, another ‘growth hack’ for the brand.
To fix the credit card issue, the service began for the first time to accept alternate forms of remittance. They began taking debit cards, payments via Apple’s iTunes, even phone credit as monthly billing.
And to fix the trust issue, the brand started to legitimise itself by buying T.V. advertising airtime. Another first for Netflix, which had previously focused only on digital, P.R. and inbound marketing.
The results have been predictably astounding. Brazil has become Netflix’s largest market outside the English-speaking world. Analysts estimate it has 4 million to 5 million subscribers in the country, trailing only the U.S. and U.K.
By practising a company wide policy of stoicism and being practical and solution focused in the face of huge obstacles Netflix broke new ground for streaming and cornered the Brazilian market.
They retained perspective in the face of adversity.
What stands in the way becomes the way.