3 ms·

They will be using the local currency for every country.

fabiandesimone 15y ago
That's very interesting. In Venezuela there is a controlled currency market meaning that is illegal to trade in foreign currency without the approval of the local government. Right now Venezuelan have the following impositions: You get a maximum of 5000 dollars a year for travel. Is not 5K for every travel you make, is 5K for all the trips you might take on a given year. Not only that you don't get them all at once: you must report were you are going to and they have a table of predefined amounts for each destination. For example: If you go to the USA, you get something like 50 dollars a day. This mean that if you go 30 days, they (the government) will approve you 1500$. These 1500$ of course comes with some restrictions: you can only use them in the country you said you were going to. This means that if I happen to take a small trip to Toronto, I can't spend any of that money. If I do there are serious consequences (penalties) On the Internet side of things, you get 400$ a year for Internet purchases. When I say get, I mean you are allowed to buy that amount of dollars at the set market price of 4.3 Bolivares per dollar. This price is set by the government. At this point it should be pretty obvious to anyone reading this that all these impositions have create a secondary market (which by law, as a Venezuelan, I can't talk about it) But let's say the price of the dollar is quite high. How is any of this related to Netflix? Netflix is going to charge in Bolivares. Then they will need to go to the government to ask permission to change those Bolivares at the current set market rate. The main issue here is that most likely the government won't be giving them the needed currency (not necessarily because they don't want to, but because they don't have enough cash to do it). What happens then: Netflix will be full of Bolivares, that are subject to a 30% inflation a year. So they would inevitably need to go to the secondary market to change those Bolivares to Dollars. This has its consequences: they would get about half of what they would if the government granted them the requested currency and second, trading in the secondary market is highly illegal these days with some serious jail time. So, Netflix in Venezuela, to me seems like an strategic move to cover the region, but business wise I don't see it lasting long if the current limitations stay. Other than that, I think is great they are investing in Venezuela :)
- jedberg 15y ago
  Could Netflix buy a bunch of oil using their stores of local currency and then ship that oil to the states and resell it? Just a thought. I doubt Netflix wants to get into the oil shipping business. :)
  - fabiandesimone 15y ago
    Not really :) Oil in Venezuela is traded in Dollars so you would have the same problem.
- georgieporgie 15y ago
  That is bizarre and fascinating, thanks for explaining it!

That's very interesting. In Venezuela there is a controlled currency market meaning that is illegal to trade in foreign currency without the approval of the local government. Right now Venezuelan have the following impositions: You get a maximum of 5000 dollars a year for travel. Is not 5K for every travel you make, is 5K for all the trips you might take on a given year. Not only that you don't get them all at once: you must report were you are going to and they have a table of predefined amounts for each destination. For example: If you go to the USA, you get something like 50 dollars a day. This mean that if you go 30 days, they (the government) will approve you 1500$. These 1500$ of course comes with some restrictions: you can only use them in the country you said you were going to. This means that if I happen to take a small trip to Toronto, I can't spend any of that money. If I do there are serious consequences (penalties) On the Internet side of things, you get 400$ a year for Internet purchases. When I say get, I mean you are allowed to buy that amount of dollars at the set market price of 4.3 Bolivares per dollar. This price is set by the government. At this point it should be pretty obvious to anyone reading this that all these impositions have create a secondary market (which by law, as a Venezuelan, I can't talk about it) But let's say the price of the dollar is quite high. How is any of this related to Netflix? Netflix is going to charge in Bolivares. Then they will need to go to the government to ask permission to change those Bolivares at the current set market rate. The main issue here is that most likely the government won't be giving them the needed currency (not necessarily because they don't want to, but because they don't have enough cash to do it). What happens then: Netflix will be full of Bolivares, that are subject to a 30% inflation a year. So they would inevitably need to go to the secondary market to change those Bolivares to Dollars. This has its consequences: they would get about half of what they would if the government granted them the requested currency and second, trading in the secondary market is highly illegal these days with some serious jail time. So, Netflix in Venezuela, to me seems like an strategic move to cover the region, but business wise I don't see it lasting long if the current limitations stay. Other than that, I think is great they are investing in Venezuela :)

jedberg 15y ago
Could Netflix buy a bunch of oil using their stores of local currency and then ship that oil to the states and resell it? Just a thought. I doubt Netflix wants to get into the oil shipping business. :)
- fabiandesimone 15y ago
  Not really :) Oil in Venezuela is traded in Dollars so you would have the same problem.
georgieporgie 15y ago
That is bizarre and fascinating, thanks for explaining it!