A report published this week forecasts the OTT markets in Argentina, Brazil, and Mexico to more than double in value over the next three years, but the ability for OTT services to spread is inhibited by an array of factors faced by Latin America as a whole.
Netflix has amassed over 10% of the region’s 66 million broadband homes in around four years of operation, but poor broadband infrastructure, strong local TV providers, high levels of piracy, and complexities around payment are all barriers for Netflix and other OTT services looking to dominate, or even enter, the market, according to the Prospects for Premium OTT in Latin America report from Ooyala, Vindicia and MTM.
Industry executives from companies such as Telefonica, Globo, CNN Mexico, Telefe, and Turner believe that the market will see significant growth in the very near future. The execs say this will be driven by the costs of OTT technologies dropping, an improvement in broadband infrastructure across the continent, and the desire of companies to invest in OTT.
There are only 10-15 fixed broadband subscriptions in the largest countries in Latin America per 100 people, compared to 30 to 35 in the US and Canada. What’s more, the connection speed required to stream OTT content is considered to be at least 4 Mbps – but in Mexico only 60%, and in Brazil just 30% of lines have access to connection speeds faster than 4 Mbps.
However, the report forecasts the continent’s major markets to show significant growth, more than doubling in size between 2015 and 2018 – Argentina is set to grow from $45 million to $115 million, Brazil from $180 million to $460 million, and Mexico from $240 million to $450 million. The report states that the entire Latin American market grew 58% from 2012 to 2015, and currently sits at approximately $756 million, of which Netflix accounts for 66%.
Separately, a report published by Digital TV Research in June 2015 forecast OTT TV and video revenues in Latin America to reach $1.13 billion by the end of 2015, and $2.91 billion by 2020.
Aside from the obvious infrastructure issues faced by Latin America, consumers are apparently satisfied with the services from free to air and pay TV providers, which have a strong influence and rapport with communities – investing in the production of local content, premium rights and new services. Linear TV is yet to reach its peak in Latin America, partly because of that broadband issue, and the fact that higher quality video can be acquired using DTH and in some cases cable, and because the continent, for the most part agreed in 2007 to take ISDB-T for its digital broadcast, and this has not yet fully deployed across the continent.
According to the report, recent studies have found that around half of internet users in Latin America access pirated content – citing that industry executives openly accepted the threat of piracy to the market as a worsening reality.
Furthermore, issues around the form of payment for OTT services is a challenge for the industry – as credit card adoption is still relatively low in Latin America, and consumers are therefore unable to pay online. Gift cards have been suggested by OTT providers as an alternative payment method, which is reportedly popular in Mexico, but not so much in Brazil.
“There’s no question Latin American viewers will take to streaming content like the rest of the world,” said Caitlin Spaan, SVP marketing for Ooyala. “For example, local industry participants expect niche services to proliferate across the region, suggesting that by 2018, there could be up to 40 providers of specialist services with more than 50,000 subscribers in Mexico, up to 20 in Brazil and up to 15 in Argentina. The most attractive and lucrative niches are expected to be in children’s programming and sports – especially soccer – with specialty film, music, religion and lifestyle closely following.”
America Movil’s Telmex also announced plans this week that it has developed a triple play OTT offering – including internet, fixed voice services, and unlimited access to its Claro Video OTT offering. This is in retaliation to the Instituto Federal de Telecomunicaciones (IFT) regulatory body placing restrictions on its pay TV activities in the Mexican market, and to allow other operators access to its cable network.
The Asian market, however, is an entirely different kettle of fish compared to Latin America, which has just two languages, Spanish and Portuguese, and common cultural factors. Asia Pacific is more like Europe, with many languages and diverse cultures, even if there is a common demand for some of the leading western movies, TV and sports content.
Towards the end of last year, Rede Globo became the first broadcaster in Brazil to roll out a combined live and on demand multiscreen OTT offering – Globo Play. In doing so, it joined in competition with the likes of Claro TV’s Tele Viva and Net Servicos’ Now Clube – both owned by América Móvil, and available as TV Everywhere services to up to 10 million pay TV customers between them. Further platforms from MNOs in Brazil feature Telefónica-owned Vivo Play, DirecTV’s Sky Brazil which offers Sky Online, and Oi also offers pay per view services Clube Oi TV and Oi. Pure-play OTT services include Crunchy Roll, Looke, Crackle, and NetMovies.
Source: http://www.rethinkresearch.biz/articles/latam-ott-double-2018-infrastructure-improves/
