2016 Latin America - Video Streaming and Digital Media

Latin America’s pay TV market under pressure from videostreaming services

The digital media landscape in the Latin America and Caribbean region (LAC) has seen considerable changes in recent years, both in terms of market consolidation and in the effects wrought by the fast-growing OTT sector.

Consolidation has resulted in the digital media markets in some countries being dominated by only a few players. In Brazil, América Móvil has now merged its three operations (Claro, Embratel and Net), while the other regional player Telefónica has incorporated its unit Vivo with GVT, rebranding the latter as Vivo in the process. In Mexico, the US telco AT&T acquired DirecTV in Mexico, which has enabled it to incorporate digital media with its existing and extensive mobile service offerings, having already acquired the Iusacell and Nextel operations. In the Caribbean, the regional player Cable & Wireless Communications acquired Columbus International in March 2015, and is now itself in the closing stages of being acquired by Liberty Global. This will enable Liberty Global to incorporate its own businesses in Puerto Rico and Chile with those of Cable & Wireless across the Caribbean. This increased scale will have competitive repercussions for Digicel Group, which is itself branching out from mobile services to bundled service offerings in its local markets.

The potential for further growth in the LAC region remains huge, despite a range of difficulties presented by the high cost of infrastructure (particularly in some areas which are topographically difficult), the relatively low purchasing power of subscribers, and stagnant ARPU which has stymied revenue growth.

The adoption of OTT videostreaming services, incorporating IPTV, VoD and mobile video, has been facilitated by improved fixed-line and mobile infrastructure. Operators continue to upgrade DSL and cable networks to provide far higher data throughput, a process which is continuing with investments in DOCSIS3.1 as well as vectoring DSL and G.fast technologies. At the same time, fibre-based networks are gaining ground, and the growth in the number of subscribers on FttP/B infrastructure is far higher than that for copper infrastructure. This trend will continue in coming years, particularly given the support for national fibre networks provided by some governments.

Until recently there was fairly consistent growth in the pay TV sector across the region. This remains the case in a few markets, but the dynamics have changed considerably since the launch of OTT videostreaming services. Netflix was among the first of these providers, launching services in 2011. Since then many others have joined the sector, including many telcos which provide their own service offerings. This has encouraged subscribers in some markets, particularly in Brazil which is suffering a drastic recession, to abandon subscription pay-TV services for cheaper OTT offerings.

Henry Lancaster

May 2016

Data in this report is the latest available at the time of preparation and may not be for the current year