Mexico. Accelerating inflation and the imminent economic recession in Mexico and much of the world has reduced the dynamism, attraction and acquisition of new users in the market for subscription video on demand (SVOD) platforms.
In terms of a positive externality, the pandemic detonated during the first years an acceleration effect in the contracting and use of these alternatives for access to audiovisual content, reaching an annual growth of 18.2% during the fourth quarter of 2020 (Q4-2020).
However, in the first half of 2022 this dynamic was reduced by more than half, to reach 8.4%.
Thus, in the second quarter of 2022 (Q2-2022), subscriptions to SVOD platforms accounted for 12.6 million, equivalent to 6 out of 10 Internet users or 56.2 million Mexicans having access to a catalog of original, exclusive content, sporting events and other live events, as well as an increasingly vast historical collection of films and series.
Platform Market Footprint. Today players in the market face increasing diversification and competitiveness with alternatives that enable access to reduced prices and even free content through advertisements. These circumstances have led to a change in tariff strategy and offer model of subscription platforms.
In Mexico, the continued loss of subscriptions and the incremental preference for other streaming players triggered the launch of a new "basic plan with ads" by Netflix at a reduced price ($ 99 pesos per month), lower resolution in content and a limited catalog. As of Q2-2022, the market share of the incumbent platform, until now purely SVOD, amounts to 61.1% of total subscriptions, a decrease of 2.4 percentage points (pp) compared to the level it registered six months ago, at the end of 2021.
In stark contrast, Disney+ (12.8% of SVOD subscriptions), HBO Max (10.3%) and Amazon Prime Video (7.6%) continue to record significant user additions, growing 0.2, 1.0 and 0.5 pp, respectively. These platforms have focused on solidifying a strategy based on attractive and differentiated content, promotional rates and affordable prices, packaging with other alternatives for access to audio and video content, as well as free shipping on electronic purchases, to boost their market footprint.
From the implementation of these strategies, the Star+ platform has managed to scale its market share to 2.1% of total subscriptions to Q2-2022.
In the case of national platforms, Claro Video and Blim TV recorded a growing market share of 2.8% and 1.6%, respectively. An increasing number of other players including YouTube Premium, Apple TV+, Paramount+ and Lionsgate+ reach an aggregate ratio of 1.6% of the market.
SVOD prospective. Since the incursion of historical players in the content market (Disney and Warner Bros. Discovery), the launch of more free access alternatives with advertising, as well as the possibility of watching live sporting events, consolidated platforms such as Netflix have lost market share and face structural barriers to expand their preference.
This, together with adverse economic conditions, place the SVOD market in a frank process of evolution and reconfiguration of tariffs, competitiveness and preferences. These circumstances will be reflected during the second half of 2022 and early 2023, with the implementation of new tariff plans, the launch of new alternatives and their promotional offer individually or with other content access platforms.
Analysis published by Ernesto Piedras of The Competitive Intelligence Unit, CIU.
