LATAM positioned as critical market for OTT

DetailsGabriel Miramar-Garcia | 11 June 2015

Latin America is poised to become an important market for over-the-top (OTT) vendors of all kinds, whether equipment, content or service providers, according to research from TDG.

The region has seen significant changes over the past two decades, including: a growing young population; a common Spanish and Portuguese-language media market; and the emergence of an educated, urbanised middle class. Combined, these elements are the driving force behind a sizable base of technology-savvy, Internet-connected consumers now encountering OTT video.

"Latin America is an important global market by virtue of its size, growth and cultural relevance - and, of course, its crossover with an increasingly Hispanic US market," noted Joel Espelien, senior analyst at TDG. "This developing opportunity was not lost on Netflix, which first entered the market in 2011 and is now available in 43 countries across the region."

As of April 2015, Netflix reported more than five million subscribers in Latin America, less than originally expected. Recent growth, however, has spurred Netflix to invest heavily in original Spanish-language content specifically designed for this market. "The fact that Netflix is expanding its efforts in the region should send a strong message to others that the time for entry is now," Espelien added.

But OTT video in Latin America also faces inhibiting forces, including poor penetration of fixed broadband, widespread poverty and the dominance of legacy free-to-air broadcasters. Despite these challenges, TDG forecasts that OTT video will experience strong growth in Latin America over the next decade. By 2025, Latin American OTT video viewers will collectively consume 25% of all video viewed, generating $8 billion in annual revenue.