Latin America pay-tv market to hit $28B

Gabriel Miramar-Garcia | 08-11-2012

Rising competition in the Latin America pay-TV market is proving to be a boon to consumers in the region, according to a report from Frost & Sullivan. The market earned $15.23 billion in 2011, but that will nearly double to $28.75 billion in 2017ódriven by expansions in coverage to underserved areas, and rollouts of advanced services elsewhere.

The rising competition among cable TV, satellite operators and IPTV operators in Brazil, Chile, Colombia and Mexico in particular will push operators to improve the availability and quality of services, add value to service offerings and enhance price points, the firm predicts.

This trend has gained momentum with the merger of the fixed and mobile operations of America Movil and Telefonica S.A. in several countries in Latin America.
"The entrance of telecommunications companies will intensify competition in the market," said Frost & Sullivan Research Analyst Guilherme Faggion. "The emergence of IPTV services in all the countries in Latin America; the launch of hybrid DTH, IPTV, and digital terrestrial television set-top-boxes; as well as the deregulation of cable TV in Brazil are likely to solidify this trend."

Cable TV and IPTV operators will especially look to stretch their services beyond urban areas to cover the underserved small and medium cities, which, thanks to higher economic growth, are increasingly filled with those willing to subscribe to pay-TV services.

That's not to say there won't be market challenges: the heavy tax burden on Pay TV services, especially in Brazil, and the difficulty of obtaining ROI from the implementation of networks in distant geographic areas and small cities will be obstacles to gaining scale in underserved markets. So, operators will need to negotiate with content providers and suppliers to launch novel, lower-priced plans, and even prepaid plans, which can buffer the lack of government incentives and the high taxes. And, the network builds themselves will need to be innovative.

"Investments in wireless technologies and hybrid set-top-boxes will aid the offer of lower-priced services aimed at low-income users," noted Faggion. "This will considerably enlarge the subscriber base and open up additional revenue streams."

Meanwhile, the over the top (OTT) market is not a threat to the market yet, but that may change, depending on the quality of broadband offerings, applications with attractive content for the Latin American market, and installed base of video games and connected TV offerings like Apple TV, Frost said.