RIO DE JANEIRO — As part of Netflix’s effort to expand in Latin America’s largest market, the company announced Wednesday Oct. 9 Matheus Souza’s “Apenas o fim” was the winner of a local contest to select a Brazilian pic for distribution through Netflix worldwide.

Brazil was the first country where Netflix deployed in Sept. 2011 outside the U.S. and Canada, and the country is company’s number one market in Latin America, said the Netflix’s chief content officer Ted Sarandos, who disclosed the contest winner during the Rio Film Fest. Currently in 41 countries worldwide, Netflix opened an office in Sao Paulo, Brazil, early this year.

The Netflix deployment is shaking up the local market, prompting the big established local pay-TV operators, such as NET, to launch VOD services in a defense move to prevent the lost of subs.

Although the company does not disclose local subs figures, it is known Netflix is rapidly expanding its subs base in Brazil.

IHS Electronics & Media estimated Netflix’s total Latin American paying subsribers at 1.6 million year-end 2012.

The main challenge for the operation here comes from regulatory and fiscal issues. Brazil’s National Film Agency Ancine) served notification in August to both Netflix and Apple’s iTunes that the two international VOD distributors are required to pay the local tax contribution called Condecine. This is a fixed fee of$1,400 for every pic and US$340 for every series distributed in Brazil.

Designed for traditional television and theatrical markets, Condecine would represent a huge load for VOD distributors whose strategy is to make thousands of titles available on the market.

Sarandos commented the issue to Variety: “Television is radically changing. We are dealing with that in all territories. VOD is injecting new money into local productions.”

Netflix has also commissioned its first exclusive production in Brazil. “A toca” a three-seg half-hour series produced by web phenom comedians, the Parafernalia group. It is available just to local subs.

Sarandos said the company has plans to produce locally original shows with robust budgets and worldwide distribution, but would not committee to a timetable: “We will start producing original content in Brasil as soon as we have a large enough subscriber base.”

“Apenas o fim” will be offered to Netflix’s worldwide platform as of the beggining of 2014, with subtitles in all native languages of the countries where the company operates.

“It all began with a raffle of a whiskey we organized at the PUC University in Rio. That’s how we started to raise money for our small production,” said Souza.

The pic caught the attention of Mariza Leao’s Rio-based Morena Filmes, producer of blockbuster comedy franchise “Upside Down,” that post-produced it.

“Apenas o fim” won audience and special jury prize kudos in the 2008 Rio Fest, had a limited theatrical release in Brazil and will now open worldwide.