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Consultancy Frost & Sullivan expects the pay-TV market in Mexico and Brazil to expand above the industry's average 12% growth from 2009-15, Frost & Sullivan analyst Renato Pasquini told BNamericas.
According to Pasquini, the two countries currently have below average pay-TV penetration for the region.
"We're already seeing some saturation in Argentina and Chile, which are mature markets in Latin America, but Brazil is really below the average for the region," Pasquini said, adding that the law passed last month in Brazil to allow telecoms companies to offer cable TV and IPTV will be a major boost for the market.
Telecoms companies are also investing considerable amounts in satellite TV (DTH) in Brazil, Venezuela and Mexico. Pay-TV coverage is relatively widespread in urban areas but low in rural areas.
DTH will be the fastest growing pay-TV offering in the region over the next few years precisely because it can reach almost 100% geographical coverage. It can also reach the consumer at more affordable prices - which in the case of Venezuela is being offered in a prepaid format.
A recent Frost study of the top six economies in Latin America - Argentina, Brazil, Chile, Colombia, Mexico and Venezuela - estimates that the Latin American pay-TV market saw revenues of US$9.62bn in 2009 and that could reach US$19.13bn in 2015.
Frost takes into account the challenges to the pay-TV market presented by the arrival of over the top video services like Netflix, which launched in Brazil, Argentina and Chile this week.
Other challenges include pirate connections to DTH. For example, when Telefónica (NYSE: TEF) launched its DTH service in Brazil, it faced the problem of people buying set-top boxes and using generic smart cards to access the content for free. This led Telefónica to change its smart card access system.
IPTV launches are expected soon in Brazil. But in Argentina regulation still does not permit telcos to offer that service, and in Mexico incumbent Telmex is not allowed to offer IPTV.
IPTV already exists in Chile (with Telsur and Telmex), in Colombia (UNE EPM) and in Mexico (Maxcom). Growth rates are high, but the penetration is still small as an overall percentage of those pay-TV markets.
Pasquini believes IPTV will increase as broadband speeds rise. Also, telecom operators' entry in the pay-TV market will increase the trend of convergence and service integration, causing a proliferation of triple and quadruple-play services and reducing prices.