LATAM pay-TV operators focus on low income groups

Editor | 09-11-2012

Latin American pay-TV cable TV and DTH operators will be having high hopes for low income groups as they attempt to leverage increased geographic coverage to the next level of competitiveness, according to new research by Frost & Sullivan (F&S).

The Latin American pay-TV Services Markets survey found that rising competition among cable TV and DTH operators, and IPTV operators in Brazil, Chile, Colombia, and Mexico will likely improve the availability and quality of services, add value to service offerings, and enhance price points in a market worth $15.23 billion in 2011 and which will likely reach $28.75 billion by 2017.

"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 (DTT) set-top-boxes, as well as the deregulation of cable TV in Brazil are likely to solidify this trend."

Looking at key drivers, F&S pointed to increased investment by cable TV and IPTV operators which it believes will encourage market participants to stretch their services beyond urban areas and cover the under-served small and medium cities as well. Explaining why this would be potentially lucrative segment, F&S observed that low-income groups were increasingly subscribing to pay-TV services on the back of the region's higher economic growth. This trend, says the report, has gained momentum with the merger of the fixed and mobile operations of América Móvil and Telefónica in several LATAM countries.

However, F&S cautioned that governments seeing pay-TV as a cash cow may hinder market developments. It noted that the heavy tax burden on pay-TV services, especially in Brazil, and the difficulty of obtaining return on investment from the implementation of networks in distant geographic areas and small cities challenges operators' ability to gain scale and offer convergent services over networks. Furthermore it highlighted the spectre of over-the-top services which may emerge with the increased rollout of broadband across the region.