A newly published IABM report investigates the state of the Latin American broadcasting market and its prospects for growth, with a focus on the continent’s adoption of HD, UHD and OTT services. IABM research analyst Chiara Raucci summarises its key findings
Latin America is an emerging broadcast and media technology market, with major economies such as Brazil, Mexico, Colombia and Argentina leading the development. However, many countries in this region currently lack the infrastructure and resources required to further develop their broadcast and media industries.
In 2019, growing levels of debt in Latin America, global trade tensions such as the US-China trade war and a drop in the price of oil will affect regional economic growth. The economies that are expected to perform better are the Dominican Republic and Panama with predicted GDP growth of 5.7% and 5.6% respectively. In contrast, Venezuela will remain the worst performer with a 10.0% GDP contraction.
Mexico is still the only country in the region to have completed the analogue switch-off. A lack of government support and an inability to manage economic and political issues has hampered switch-off to date. However, the transition from analogue to digital broadcasting is appealing for many governments in Latin America, and currently more countries are set to join the list. Argentina and Colombia are planning to complete the process by August and December 2019 respectively.
Brazil’s transition has been quite slow. The analogue switch-off started back in 1999, and the first cities to complete it were the west of Paraná and the south of Rio Grande do Sul. In inland parts of the country, the process should have been finalised by the end of December 2018. Similar to incentives offered by the Mexican government, Brazil has been providing a low interest loan from the Bank of Brazil for BRL 1400 (USD 600) to low-income households for the purchase of digital equipment to accelerate the transition.
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Today, HD remains a differentiator primarily offered by pay-TV operators to maintain a competitive advantage over other market players, who primarily broadcast in SD. In recent years, the increase in the number of digital TV subscribers as well as the development of satellite broadcasting have boosted the growth of HD channels in Latin America. Satellite providers are entering the growing Latin American market to compensate for reduced growth in maturing markets such as North America and Europe.
Given the growth in the number of satellites delivering signals to DTH households in Latin America in the coming years, major satellite pay-TV operators such as Claro, DIRECTV Latin America, Dish Latino and TuVes Digital are preparing for the increasing competition by coming up with new business models. For example, TuVes Digital, which targets emerging markets in Latin America, uses capacity on Telesat’s Telstar 12 Vantage satellite, through a prepaid model.
As HD channels are currently offered mainly by pay-TV operators, the expected growth in the Latin American pay-TV market suggests that the number of HD channels will rise at a healthy rate, particularly in Mexico and Brazil.
As of March 2018, the largest pay-TV market in Latin America was Mexico with about 19.3 million pay-TV households, followed by Brazil with 17.8 million pay-TV subscribers (i.e. households).
Brazil and Mexico have the largest number of HD channels, followed by Argentina, Colombia, Chile, Peru and Venezuela. As the number of DTH households grows, many pay-TV operators continue to add HD channels. For example, Sky Brazil added nine HD channels in 2017. Other pay-TV operators are also adding new HD channels to their offering – Argentina’s largest pay-TV operator, Cablevision, has brought its offering up to 70 channels during 2017 and 2018.
The transition to UHD
The transition to UHD is still at a very early stage in Latin America, as most broadcasters are focusing on upgrading their infrastructures to HD. Even though the Rio de Janeiro 2016 Olympic Games accelerated adoption and increased the number of UHD-related initiatives by broadcasters, the transition to UHD as a whole remains slow and market growth relatively modest in Latin America. The recent economic crisis in the region, decline in consumers’ disposable income and social instability in certain countries such as Mexico and Brazil have further delayed UHD/4K initiatives.
“The transition to UHD is still at a very early stage in Latin America, as most broadcasters are focusing on upgrading their infrastructures to HD.”
As is the case in other markets, live sports is a key driver of UHD adoption in Latin America. For example, in 2018, DIRECTV – in association with ESPN – broadcast some matches in UHD from La Liga, Premier League and UEFA Champions League, and in June 2018 it covered the FIFA World Cup in Russia for the first time in 4K UHD.
The OTT market
The OTT market in Latin America is growing, even though low broadband penetration and poor broadband speeds are hindering its development. The number of fixed-line broadband subscriptions is still low, and a minority of these subscriptions provide connections faster than 4 Mbps, which is the minimum requirement to stream HD video. Hence, most internet access happens via mobile phone. Underdeveloped payment infrastructure is also hindering the growth of the OTT market – many Latin Americans do not have a bank account or a credit card, which is perceived to be a major barrier to premium OTT take-up.
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In terms of revenue, SVOD will remain the largest OTT revenue source, rising to US$ 4.4 billion by 2023. The top five countries in Latin America will generate US$ 5.3 billion in OTT revenues by 2023, accounting for 83% of the regional total.
A growing number of pay-TV operators are launching their own standalone streaming services to compete directly with new OTT players like Netflix, Amazon Prime and other OTT video companies. These virtual pay-TV alternatives to traditional pay-TV are more flexible and priced lower than operators’ core offerings. As a response to the intensifying competition, Netflix has increased investment in local content and talent.
“The OTT market in Latin America is growing, even though low broadband penetration and poor broadband speeds are hindering its development.”
The main channel for accessing 4K OTT content will remain TVs, but the further adoption of multiscreen technology will make 4K content available for smartphones, tablets and personal computers. By 2022 US$ 5 billion will be invested in OTT services that broadcast content in 4K globally. Latin America is estimated to rank fourth in terms of 4K OTT revenue with about US$ 170 million, which though represents only 3% of the global total.
IABM Regional Reports
IABM members can access the Regional Reports on Middle East and Africa (MEA), Latin America, North America, Europe and Asia-Pacific on the IABM website. These include detailed insights on the latest regional developments as well as provide information for entering a new market.