Infrastructure , content key to LatAm OTT success
Research from enterprise-class subscription billing specialist Vindicia and video , analytics and advertising technology provider Ooyala suggests that premium OTT is set for strong growth in Argentina , Brazil and Mexico . Major pay-TV providers and regional media groups are investing in services tailored to local tastes , increasing consumer awareness and paving the way for significant market growth through to 2018 .
Industry participants across the region expect key markets to roughly double in size between 2015 and 2018 , from $ 45 million to $ 115 million in Argentina , $ 180 million to $ 460 million in Brazil , and from $ 240m to $ 450 million in Mexico . “ Premium OTT in Latin America has developed relatively slowly , despite Netflix ’ s strong presence in the region , but strong local players are now gearing up to grow the OTT market . There is considerable headroom for growth , especially at lower price points . While Netflix and other international contenders will have to fill the local content gap , everyone will have to face the challenges of poor broadband infrastructure , driving consumer awareness and take-up , and processing payments ,” said Jon Watts , Managing Partner at research firm MTM .
MTM interviewed 60 experienced executives from across the technology , media and entertainment industries , including studios and broadcast networks , rights holders , leading multichannel video programming distributors ( MVPDs ), mass-market and niche OTT providers and online video businesses , producers , and investors . l Industry participants are optimistic about
Industry participants across the region expect key markets to roughly double in size between 2015 and 2018 future prospects for the market , but highlight important challenges facing local providers , including : l Poor broadband infrastructure : Limited broadband penetration in Latin American countries is a significant barrier for services delivered over the Internet . There are only 10-15 fixed-line broadband subscriptions per
100 inhabitants in the major Latin American countries , compared to 30-35 in Canada and the US . In addition , of those broadband connections , less than 60 % in Mexico and less than 30 % in Brazil provide a connection faster than 4 MBps , which is considered to be the bare minimum for streaming premium OTT content . l Strong local TV providers : Throughout Latin America , strong local FTA and pay-TV providers continue to invest heavily in local content production , premium rights and new services and have substantial market power and strong consumer relationships . Linear TV viewing is still growing and many consumers appear satisfied with existing TV offerings . l High levels of piracy : Industry participants in Latin America were open about the spread and acceptance of online pirated content , with recent studies suggesting that roughly half of Latin American Internet users access pirated content . l Complexities around payment : Payment is perceived as a major barrier to premium OTT take-up in Latin America . Credit card penetration is low and consumers are frequently unwilling and unable to pay for goods and services online . As this situation is not expected to change significantly , OTT service providers will increasingly look to offer alternative methods of payment , with approaches varying market-by-market – for example , gift cards are believed to be an attractive option in Mexico but not in the Brazilian market . Despite these challenges , industry executives believe the market is poised for growth . The technical costs and complexities of developing new OTT offerings are coming down , local infrastructure is gradually improving , and a wide range of local companies
– from start-ups to major media conglomerates – are investing to launch and grow premium OTT offerings .
“ There ’ s no question Latin American viewers will take to streaming content like the rest of the world ,” said Caitlin Spaan , senior vice president of marketing for Ooyala . “ For example , local industry participants expect niche services to proliferate across the region , suggesting that by 2018 , there could be up to 40 providers of specialist services with more than 50,000 subscribers in Mexico , up to 20 in Brazil and up to 15 in Argentina . The most attractive and lucrative niches are expected to be in children ’ s programming and sports – especially soccer – with specialty film , music , religion and lifestyle closely following .”
“ From Vindicia ’ s perspective , we are committed to providing a recurring billing platform that will allow service providers to be reliably profitable for the long term ,” said Bryta Schulz , senior vice president of marketing for Vindicia . “ Already , the entire Latin American market is worth $ 756 million . This represents 58 per cent growth from 2012 to 2015 . Netflix alone accounts for 66 % of this market . In the same period of time , a proliferation of launches from smaller streaming service providers signals that despite the current barriers , streaming is the future of Latin American entertainment , just like in other parts of the world .”
16 LATAM Briefing