This TV Network Built a Massive $50 Million Studio Mostly to Take on Netflix

RIO DE JANEIRO—It’s not just U.S. media behemoths going after Netflix. Latin America’s biggest production company, Brazil’s Globo, is vowing to never sell its shows to the streaming giant. And it built a giant state-of-the art studio just to churn out more content for its own platforms and to sell internationally. “We won’t be doing what the U.S. did seven or eight years ago, selling to other platforms,” said Grupo Globo CEO Jorge Nóbrega. “This is how Netflix was born. We won’t do that in Brazil. We won’t sell our content to Netflix and Amazon," said Nóbrega during an event in New York on Thursday announcing the opening of the new $200 million reais (US$50.785M) studio complex called MG4. Globo has its own streaming platform called GloboPlay, which is free with commercials and includes an ad-free version for about $5 a month. Netflix, meanwhile, is growing fast in Brazil and now counts the country as its No. 2 foreign market, behind the U.K. [kickout id="1"] It is foreign competition which led Globo to invest in the new facility, its biggest such expansion in 25 years. “With Netflix and the possibilities for producing for other markets we needed to expand our production capacity,” said Globo Network CEO Carlos Schroeder. As we first reported two years ago in a series of reports on Globo, nearly half the population of 209 million Brazilians tunes in to the network at some point every day. The challenge is knowing who those viewers are. “We know 30 million of them, but we want to know the 100 million who come to Globo every day,” said Nóbrega. “In this world, you know who is logged in, who are the subscribers, what did they watch, for how long, why they did not subscribe.” Nóbrega said this is all about a "transformation" for Globo. "It is a big change for us. We want to change to a model that is relating directly with the consumers. We believe our future is there. You see the movements of Disney in America. Technology is now an essential variable," he said. That transformation also includes how it works with its advertisers. "We need to change commercial work, we need to be more flexible, understand the demands," he said, adding that he'd like pricing to work more "like an airline company or a hotel where our prices change every day." Globo brought in $15 billion reais in revenue last year, with $1.5 billion in operating income, said Nóbrega. [kickout id="2"] The new complex includes three studios, each of which could fit a Boeing 737. Nóbrega said the company will invest $1 billion reais a year in technology and $4.2 billion reais annually on entertainment production, not including sports and news. Globo, which employs about 13,000 people—4,000 alone in technology—also has 24-hour news and sports channels. Most of the shows produced in the new studios will be still-hugely popular telenovelas. Schroeder said the more than 250 writers on staff have years worth of stories in the pipeline with a schedule mapped out to 2021. And with all that new content Globo will be looking to sell beyond its traditional international markets like Mexico, Portugal, Angola and the U.S. Nóbrega is looking toward countries like China, Turkey, India and South Africa for growth. “There is space for the company to focus macro-regionally,” he said. “You see how difficult it is for Netflix to grow internationally,” said Nóbrega. “We are playing this game, we know it’s expensive, we know it’s risky, but we have the skills to play our own game, not the game of our competitors."