Contents

Introduction

The pay TV offer in Latin America is starting to take shape in key markets. A quick look at the operators that are present seems similar  in some ways to other telecoms services: Telefonica, mostly through Movistar, America Movil, a still strong group of cable operators with strong national, media or broadcasting ties (Televisa, Grupo Clarin), and the newcomer who has left a mark, DirecTV.

According to Carlos Blanco, senior analyst with media consulting firm Dataxis, DirecTV's offer with its DTH (satellite) technology has led to more competition and also lowered the barriers for many newcomer consumers to hire a pay TV offer. On the one hand the company has done this with a simpler setup, you just need a dish, therefore are free of last mile and bandwidth considerations that could occur with cable or telcos. But the advance has also been linked to its commercial strategy. The company has used lower priced prepaid services to attract new users, allowing the flexibility that has proven effective in the mobile phone market. Pay for what you consume, but no fixed plan.

On the back of this have been developments on the technology side. Growing broadband speeds have led way to new OTT (over-the-top) availability, as companies like Netflix look outside their home base of the United States for further growth. This has in turn changed how viewers expect to consume and browse their content. This is enabled in part by trends in second screens and the rise of smartphones, enabling content viewing in all sorts of new settings.

For a region that loves its football, Brazil's World Cup was an obvious motivator to hire pay TV services, or for broadcasters to showcase their OTT formats.

Together, these forces have led to a solid, and dynamic base of pay TV consumers in the biggest Latin American countries. However, there are still large parts of the region, like Central America, where the penetration and rise of digital TV is still only enjoyed by a small portion of the population.

But in a number of countries such as Chile, Colombia and Brazil, the competition for viewers' attention and the subscriptions is heating up, taking with it the technology and quality of offers on the market. This has also altered the spending of advertising and spots in the region, as media buyers have a much wider range of alternatives to choose from. Cable operators have been squeezed, but still maintain a strong footprint on some of the best segments within urban centers selling multiple service packages, thus keeping ARPU high.

In this report we look at the growth of pay TV, and the forces that have led it to claim above a 50% household penetration across the region, and also at where it is headed.

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