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Streaming video soars in Latin America

April 5, 2022

Cheerful Brazil fans celebrating victory at football match on TV at a bar in Salvador
Luisa headshot

Luisa Muneratti

SVP – Iberia and Latin America

 

More and more people in Latin America are switching to the attraction of over-the-top (OTT) video streaming services as an alternative to existing terrestrial, broadcast, and Pay-TV channels.

The latest forecasts by Digital TV Research suggest Latin America will have 131m paying customers for subscription video on demand (SVOD) services by 2026[i], up from 76m in 2021. The company calculates Brazil will account for the single largest slice of that customer base (49m), followed by Mexico (32m). The predictions also suggest that SVOD subscriptions in Colombia will rise from 4.4m in 2021 to 7.3m by 2025 and in Peru from 2.1m to 3.6m in the same period. Ampere’s research confirms the upward trend, putting OTT video subscriptions in the region at almost 94m in 2022, rising to 111m by 2024.

Five US-headquartered SVOD services are expected to deliver 91% of total paying subscriptions in Latin America by the end of 2026, with Netflix claiming 48.4m ahead of Disney+ (32.5m), Amazon Prime Video (19.4m), HBO Max (10.2m) and Apple TV+ (8.1m). Claro Video, the streaming platform owned by Mexican telco América Móvil, is expected to have 3.9m subscribers by 2025.

Entrenched video consumption habits

The consumers of Latin America already spend considerable amounts of time and money streaming video content onto various devices over the Internet. A survey of Internet users aged 16 to 64 conducted by GWI in the third quarter of 2021 found that watching videos, TV shows, and movies is one of the main reasons for using the Internet for almost three quarters (71%) of people in Brazil, as it is for 66% of their counterparts in Argentina, 64% in Mexico, and 60% in Colombia.

Most of those people in all four countries (96-98%) also stream TV content over the Internet, with Brazilians spending an average of an hour and 35 minutes in the process compared to an hour and 26 minutes for those in Mexico, an hour and 21 minutes in Colombia, and an hour and fifteen minutes for those in Argentina. Between 96% and 97% of them told GWI that they watched videos on the Internet at least once a week, including music videos, comedy clips, tutorials, live streams, product reviews, sports highlights, Vlogs, and gaming videos.

According to Statista’s Market Outlook, Brazilian consumers spent US$1.6bn on video-on-demand subscriptions and downloads during 2021, slightly more than their counterparts in Mexico (US$1.33bn) but considerably more significant than those in Argentina (US$308m), Colombia (US$296m) and Peru (US$165m).

Fierce competition amongst multiple OTT video providers

The majority of SVOD subscriptions in Latin America may be claimed by a handful of more prominent, global players, but multiple OTT providers serve many countries. Statistics compiled by the Whip Media Business Bureau suggest there were 48 in Argentina alone in March 2021, with 47 on offer in Brazil and 42 in Mexico. Colombia and Chile have 36 and 35, respectively, and there are as many as 33 in Peru, Ecuador, and Uruguay. Even small Latin American countries like Costa Rica, Panama, and Venezuela are served by 28-29 video streaming platforms each.

Providers are offering content tailored to local culture and language and compete with the global players—App Annie’s mobile app rankings for 2021. Brazilian SVOD app Globoplay generated more consumer spending than any other app in the country last year, for example, ahead of Disney+ in second place and HBO Max in ninth. Netflix and Amazon were two of the top ten mobile apps in Mexico with the highest number of monthly active users (MAUs), homegrown SVOD app Blim TV generated more consumer spending than Netflix last year.

However, global brands tend to dominate in Latin American countries with smaller populations. Netflix was ranked 8th by MAUs in Argentina and Chile, 7th in Colombia, and 10th in Peru. In contrast, according to App Annie, Disney+ was ranked the leading SVOD app by consumer spending in all four countries, ahead of Amazon Prime Video and HBO Max/HBO Go.

Surveys conducted by Cámara Argentina de Internet suggest that 72% of the country’s households were Netflix subscribers in the first quarter of 2021, with other providers including Telecom Argentina’s Flow (30%) and Telefe (24%), a VOD platform owned by Viacom since 2016 after its US$345m acquisition of the free to air TV network of the same name. Amazon Prime Video reached 22% of Argentinian households at the time, on a par with TV Pública and Cuevana2/3.

As of October 2020, Netflix was estimated to have 17m subscribers in Brazil, ahead of Amazon Prime Video (10m) but behind Globoplay, which primarily distributes films and TV series produced by Estúdios Globo, according to NZN Intelligence. The global market leader dominates in Mexico, however, where it was estimated to account for almost 75% of all SVOD subscriptions in 2020, ahead of Amazon Prime Video (8.5%), Disney+ (5.3%), HBO Go (4%), and local players Claro Video (3.9%) and Blim (1.9%).

Telco OTT partnerships key to local expansion

Most consumers in the region view those VOD platforms on their smartphones. Around 98-99% of Brazilians, Mexicans, Argentinians, and Colombians aged between 16 and 64 own a smartphone, significantly more than own PCs, tablets, games consoles, or dedicated streaming TV devices. High smartphone penetration, coupled with the wide availability of low-cost devices and fast, reliable fourth generation (4G) mobile networks in many countries of the region, mean that partnerships with local telcos and mobile network operators have played a key role in expanding SVOD subscription numbers.

Omdia estimates that Netflix had as many as 24 OTT bundling partnerships across Latin America in 2021, for example,[ii], ahead of Amazon Prime Video with 19. América Móvil started bundling Netflix within the mobile plans offered by its Claro subsidiary in Brazil in 2019, while Telefónica and Vivo have 14 similar partnerships in the same country alongside Oi (nine) and Claro Brasil (five).

In Mexico, Totalplay has nine OTT partnerships, says Omdia (most service integrations into pay-TV platforms), Televisa, and América Móvil, four each. Disney+ was integrated into regional services from operators including Telmex, Izzi Telecom, Telcel, and Telecom Argentina from its launch in November 2020.

Service bundling and flexible payment options help telcos differentiate

Bundling free or subsidized OTT access alongside mobile phone subscriptions gives OTT providers access to a larger pool of potential customers while simultaneously furnishing telcos with a way to differentiate their core telecommunications services and upsell additional megabyte/gigabytes and tariffs.

Allowing consumers to fund their SVOD subscriptions and ad-hoc content downloads through their mobile phone accounts via direct carrier billing adds an extra dimension by giving people in Latin America fast, flexible, and convenient payment options that add charges to their phone bills. That is particularly important in countries that see large swathes of the population owning smartphones but not bank accounts.

World Bank financial inclusion data suggests that only 35% of people over fifteen in Mexico have accounts with a financial institution. Only 10% own credit cards and 25% debit cards. The situation is similar in Colombia, Argentina, and Peru, where between 42% and 48% of over fifteens have bank accounts, 12-24% credit cards, and 24-26% debit cards.

Making it easy for citizens without credit or debit cards to purchase SVOD subscriptions and content is likely to significantly impact the Latin American market. Forecasts now suggest that revenue from over-the-top (OTT) TV series and movies delivered across 19 countries in the region will double from US$7bn in 2021 to US$14bn by 2027[iii], the majority of which (US$9.7bn) will come from SVOD subscriptions.

Analysts note that Latin America is usually the “first stop” for US SVOD providers looking to spread their operations and content delivery to other regions of the world and subsequently act as a template for further global expansion later. With the likes of HBO Max, NBC’s Peacock, and Discovery+ only just getting started in the region, there is ample capacity for swift market growth over the next few years.

 


[i] Latin America to reach 131m SVOD subs, BroadbandTV News, 6th September 2021

[ii] TBI Tech & Analysis: Where next for Lat Am as OTT overtakes pay-TV?, TBI, 4th October 2021

[iii] Latin America OTT TV and Video Market Report 2022: SVOD will Contribute $9.7 Billion by 2027, Yahoo! Finance, 18th March 2022

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