Latin America. NAGRA, in collaboration with MTM, a leading research and international strategy consultancy, published the Latin America results of the Pay-TV Innovation Forum, a global research program to explore the next phase of innovation in the pay-TV industry.
"The Pay-TV Innovation Scenario in Latin America" is the fourth part of the global series of a study of the main challenges and opportunities for innovation in the region, which has solid growth potential and less than 10% of the industry's total revenue relative to household income and television.
The study was conducted during the second and third quarters of 2016 and is based on the extensive research program, analysis and involvement of subscription television industry executives in Latin America. MTM also examined the product and service portfolio of 44 pay-TV providers in Latin America's seven largest markets, representing a total of approximately 63 million pay-TV households.
The pay-TV industry is experiencing a period of significant change and development
• It is a global industry success, over one billion subscribers and $200 million in revenue and is expected to reach US$250 billion by 2020.
• In Latin America, it has grown strongly in the last five years and is responsible for less than 10% of the industry with respect to household income and television.
• It is highly concentrated, with a representation of 50% of the main international telecommunications groups among the total subscribers.
Innovation today: the largest service providers are the most advanced
· The most advanced portfolios are usually offered by large telecommunications companies and pay-TV operators, the properties of large international telecommunications groups as the most basic service portfolios tend to be provided by small operators and companies in the sector.
· The subscription television industry in Latin America has lagged behind in terms of product development and the portfolio of advanced and diversified services, which can be attributed to a combination of economic, technological and competitive factors.
Most pay-TV service providers have focused on the evolution of their core subscription TV offering and gradually began to move towards OTT services:
· Currently, 75% of service providers offer IP-connected set-top boxes to their customers
· 82% offer personal video recorders (PVRs), but only 14% provide access to third-party OTT services on their set-top boxes.
· "TV Everywhere Multiscreen" services are widespread. 70% of service providers in Latin America offer multi-screen services to their subscribers.
· 16% also offer independent disaggregated OTT services.
Pay-TV markets among Latin American countries are at different stages of development
· The pay-TV industry in Latin America is one of the smallest regional in the world, accounting for less than 10% of the global industry with respect to revenue and home television.
· There is a high degree of income inequality, economic slowdown in some areas, poor broadband infrastructure, high levels of piracy, a strong free-to-air TV industry, and a relatively immature OTT market.
· Income inequality remains high. According to the World Economic Forum, 10% of people in Latin America own 71% of the region's wealth in 2014.
· Less than 50% of broadband connections are above 4 Mbps, which is considered as a minimum for HD streaming.
· Channels in the region have increased their audience share which grew from around 20% in 2010 to 34% in 2016.
· Mexico and Brazil have well-established and popular open channel stations. However, in Mexico, efforts have been made to reduce the entrenched duopoly between Televisa and TV Azteca, with the authorization of two new open channels.
· Chile, Brazil, Colombia and Mexico are on the "watch list" of the International Intellectual Property Alliance (IIPA).
OTT services are transforming the way video content is consumed:
· While Netflix is the market leader in standalone OTT services, a number of pay-TV providers and channels launched their own OTT offerings, such as Claro Video and Globo Play, and many new releases are expected in the coming years.
· Most pay-TV service providers are focused on the evolution of their core subscription TV offering and are slowly moving to OTT services, through the "Multiscreen TV Everywhere" screen TV offering and standalone OTT services.
None of the leading pay-TV service providers in Latin America offer the latest generation of set-top box resources
· At the core of pay-TV offerings, IP-connected set-top boxes and personal video recorders (PVRs) are relatively widespread, with 75% and 82% of service providers, respectively, offering these features. However, no service provider offers any of the most advanced features, such as 4K video quality, voice control, content recommendations, and tapping the remotes.
· Only 14% of pay-TV service providers offer third-party apps, including social, weather and news apps. Netflix is offered by just one of the providers analyzed.
· The services of "TV Everywherere" are widespread. 70% of service providers in Latin America offer multi-screen services that allow customers to access the content channels included in their television subscriptions. Examples include Net and Claro in Brazil and Dish Movil from Mexico Dish.
· So far, only 16% of service providers have launched an independent OTT service, such as Claro Vídeo from América Móvil and Movistar Play from Telefónica.
