Research from the Pay-TV Innovation Forum 2017 – a global research programme for senior pay-TV executives that examines the state of pay-TV innovations and strategies that will drive the next phase of growth for pay-TV operators – in TV, OTT and adjacent businesses, suggests that Latin America will see substantial pay-TV growth, driven by economic development, increasing broadband penetration, convergence of pay-TV and broadband services, and developments in pay-TV propositions.
Developed by content protection and TV solutions specialist NAGRA, in partnership with MTM, an international research and strategy consultancy, the first regional seminar of the 2017 edition took place in April 2017, highlighting a number of emerging findings on the state and development of the Latin American pay-TV industry.
Across Latin America, pay-TV markets vary widely in terms of their size, and pay-TV penetration and ARPU are at very different stages of development. There is a set of high growth markets, such as Mexico and Peru (23 per cent increase in pay-TV subscribers between 2014 and 2016) and moderate growth markets, such as Colombia and Chile (8per cent), while Brazil has seen the number of pay-TV subscribers plateau between 2014 and 2016, primarily driven by deteriorating economic conditions in the country.
Despite global positive figures for the region, some industry executives acknowledge that growing pay-TV businesses is difficult due to a variety of reasons, including high levels of economic inequality, strong free-to-air TV offerings, growing take-up of OTT services, and rising rates of pay-TV piracy: “In Mexico there are new players, new services and new ways of subscribing to pay-TV services from the consumer point of view – but growth is challenging everywhere,” says the report.
Growing Threat of Pay-TV Piracy
Industry executives acknowledge that content piracy has become a significantly bigger issue in the pay-TV industry over the last couple of years. Drivers include the emergence of easily accessible illegal IPTV set-top boxes, growing costs of pay-TV subscriptions, increased sophistication of pirates, and difficulties in measuring and tracking piracy. “Content piracy is getting worse. In the old days of Bit Torrent, we could at least easily measure the impact, but now it’s much harder as a lot of it has shifted into IPTV and OTT-based boxes. The reality is that most people who are fighting piracy don’t really have visibility on its extent,” says the report.
Nonetheless, the majority of industry executives share the view that the industry will be able to reduce the impact of piracy in the long term via closer pan-industry cooperation and coordination, improved legislation and education, advancements in content protection technology, particularly forensic watermarking solutions, and pay-TV providers improving their value propositions to better address consumer needs.
Early Days for OTT, but Developing Rapidly
While the Latin American OTT market is still in its early days, industry executives believe that it is developing rapidly. “All of the pay-TV service providers in Latin America are already launching something interactive: TV Everywhere, OTT, IPTV. Everyone in the market wants to play in the digital realm,” commented one of the executives.
“Latin American pay-TV operators have recognised and, to a certain extent, responded to the growing pressures from OTT competitors by introducing their own OTT services,” said Simon Trudelle, Senior Director, Product Marketing, NAGRA. “Seventy-eight per cent of major pay-TV operators in Latin America currently offer TV everywhere services, while twenty-two per cent also offer standalone OTT services. However, they still lag significantly behind their North American peers and the global average for both TV everywhere and standalone OTT services, with eighty-three per cent and thirty per cent of operators globally offering these services, respectively.”
Improving the Core Pay-TV Proposition Remains Key, with Growing Interest in Advanced Data and Analytics
“Pay-TV industry executives across Latin America remain focused on strengthening their core pay-TV propositions to deliver more interactive and seamless experiences across multiple devices,” said Jon Watts, Managing Partner, MTM. “They are investing in next-generation set-top boxes, multiscreen TV everywhere solutions and in certain cases, standalone OTT services, while at the same time finding ways to address the large base of low income consumers. In addition to this, advanced data and analytics are becoming a major area of interest and development for certain operators. They believe that advanced data and analytics will add significant value by helping pay-TV businesses better understand their customers and deliver value through highly-relevant, personalized content and user interfaces, targeted advertising, and improvements to sales and marketing as well as customer service.”