Michelle Clancy ©RapidTVNews | 12-09-2011
In the Americas, more than 16 million homes upgraded from analogue to digital TV in 2010, new research from Informa has revealed. Also, during the year, more than 7 million new homes in the region subscribed to pay-TV, with DTH performing particularly well. While the U.S. dominates service uptake, strong growth is forecasted particularly for Latin America.
Across the Americas as a whole, the U.S. is, as one would expect, the overwhelmingly dominant force. In 2010 it had 101 million digital households – over 73% of the pan-continental total. By 2016 its statistical dominance will have reduced significantly by digital growth elsewhere in the region, although it will still take a hefty 54% of the Americas total.
Meanwhile Latin American economies continue to exhibit signs of long-term strength. Regional giants Brazil and Mexico are forecast to see strong revenue growth and good performances are also anticipated from emerging markets like Chile and Venezuela.
Once highly susceptible to global economic turbulence, Latin American economies continue to exhibit signs of long-term strength, Informa noted. This improving economic stability has been gradually making the region’s TV market increasingly attractive. The lack of maturity in many countries has long offered strong prospects for pay TV and digital growth and in 2010 this potential finally started to come to fruition – justifying the investment of those entrants that have invested (and continue to invest) in the region’s media/telco businesses.
In the 2005-2009 period the region’s pay TV subscriber total increased by an average 3.4 million annually – in 2010 this doubled to 6.8 million. The increase in the digital TV total was even more impressive. The 2005-2009 annual average of 2.9 million homes converting to digital jumped to 9.4 million in 2010, as operators upgraded analogue services or saw strong growth for new digital platforms.
Against this optimistic background, Informa Telecoms & Media is forecasting that pay TV revenues in Latin America will be worth $24.7 billion in 2016 – up by 66% on the 2010 total. Pay TV subscriber numbers are anticipated to reach 73.2 million by end-2016, up 68% from 43.5 million in 2010.
Average revenue per subscriber (ARPU) has been increasing, fairly slowly, in Latin America, reflecting an increase in the number of services on offer – and the subsequent tiering of channels and introduction of PPV/VOD packages. But TV ARPU is believed to be near its peak, with the impact of dual- and triple-play bundles pushing down the price of the TV component of the package. The launch of low cost pay TV services also puts pressure on ARPU at a regional level.
Consistent growth in digital TV is anticipated throughout the forecast period, meaning the Latin region is forecast to more than triple in size from 25.6 million digital TV households at end-2010 to 90.6 million by 2016. Brazil and Mexico combined to account for 58% of digital subscribers at end-2010. This dominance will be reinforced over the forecast period, as their superior scale is exercised to take their combined regional share up to 64%.
Digital terrestrial TV (DTT) adoption got off to a slow start, partly because of hesitation over which technology to use. Unsurprisingly the US ATSC standard has been adopted by its southern neighbor Mexico, but elsewhere the choice has moved strongly towards the Japanese ISDB standard. Brazil has gone for a variant of ISDB and most of its neighbors are following.
IPTV has a limited presence in some countries, but is still predominantly in the development stage - although several companies have big plans for the technology. But most are not yet in a position to implement them, either because of network deficiencies or, more commonly, regulatory restrictions. IPTV therefore needs regulatory clarity, network upgrades and compelling content before it can become a widespread service. But the prospect of the technology becoming a major force in the future is already acting as a spur for the rest of the industry.
The entry of cut-price (including pre-paid) services from Telefonica and Telmex has energized the DTH sector. Although a high-profile merger has not resulted in the dominance hoped for, DirecTV Latin America (DTVLA) is also reporting significant subscriber growth.
Potential entrants into the Latin American TV sector have previously been discouraged by the
major debt loads of prospective partners. But significant efforts to clear debts have been made, with several major media players successfully rescheduling their debt burden. Exchange rate fluctuations and major increases in local prices of imports from the US had a particularly detrimental effect on the broadcast sector. Many cable and satellite operators pay international channels in US dollars but receive subscription and ad revenues in local currencies. Operators sometimes pass on these extra costs to their subscribers, causing high churn. Dollar denominated contracts can also lead to greater piracy and subscriber underreporting by operators.