Disney+ and HBO Max are supposed to be the streaming services capable of shaking Netflix’s dominance in Latin America. But a number of other companies see the region as an interesting international market for a different streaming model: the advertising-based video-on-demand (AVOD).
Among the newcomers into the region, PlutoTV (the free platform of the American media giant ViacomCBS), Roku (a hardware player that allows users to watch streaming TV content from other platforms and end up creating its own streaming service), and Plex (a media server already known as an option for organizing digital libraries which started to make available a large catalog of independent productions monetized via ads that the user cannot skip) explore this model.
“We’ve seen quite a lot of AVOD services in the US that has been doing quite well. Pluto TV is one of them. Tubi is one of the larger ones. And I think this is something we’re really starting to see, as consumers reach the ceiling of how much they’re willing to pay for their services,” Lottie Towler, Ampere senior analyst, told LABS.
PlutoTV debut date it’s not defined yet, but in May, the company confirmed to LABS that it will debut in Brazil in late 2020. Less than a month before that, it launched in 17 Spanish-speaking Latin American countries, whose figures the firm still does not disclose. Ambition must be big, though. In the United States, Pluto TV has 22 million active users per month.
“We want everyone to find their favorite movie, series, or show on Pluto TV and be able to enjoy it in their language, safely and free of charge”, said senior director of content and programming at Pluto TV, Arelys Carballo, in May, adding that in Latin America there is a large offer of paid SVOD (subscription-based video on demand) services, but almost none in terms of AVOD, like the one offered by Pluto TV.
Streaming platform or player device?
Just before its market debut, investors saw the company as a hardware seller, as Roku’s device sales accounted for 59% of its total revenue. That changed a lot in the years that followed. In 2019, its ad-based platform generated most of the company’s revenue ($740.8 million from $1.13 billion), and device sales only 34% of the total. As pointed out by the tech analyst Beth Kindig in an article on Forbes, “what investors initially failed to realize was that the hardware player was a means to its high-yielding ad platform”. The analyst stressed that “Roku has an added advantage from the data it has on consumers due to owning the hardware and the many content apps that need access to an OTT device”. And the data is everything nowadays.
In the 2019 last quarter presentation, executives from Roku said that “roughly half of all U.S. TV households will have cut the cord or never had traditional pay-TV” by 2024–a quarter before more than 90% of its advertising business’s revenue came from the U.S. Not satisfied with that, the company started its internationalization, beginning in Europe, and arrived in Brazil in January this year, through a partnership with AOC to launch the AOC Roku TV in the country.
Like other Roku TVs (in 2019, nearly one in three smart TVs sold in the U.S. were Roku TVs, according to the company), the two models made available in Brazil offer Roku’s personalized home screen, built-in search, a Roku remote, automatic software updates, besides the support for the Roku mobile app. Roku’s Channel Store allows customers to choose from more than 5,000 streaming channels. In Brazil, the AOC Roku TVs cost between BRL 1.199,00 (32-inch HD TV) and BRL 1.599,00 (43-inch FHD TV). Today, Roku has more than 32 million active users and wants to reach 45 million by the end of 2020.
A good library is key
In this ad-supported model, the partnership with different platforms, studios, and channels is also what makes the difference. According to information from the Nasdaq news service, Roku already has 15 global content partners, not to mention the local ones of the markets it has started to explore, such as the Brazilian Globoplay, the service of the largest open TV channel and communication group in Latin America.
Pluto TV Latin America, in its turn, currently offers 12,000 hours of content from around 60 partners in Argentina, Bolivia, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru, Paraguay, El Salvador, Uruguay, and Venezuela. In Brazil, the company has not yet revealed its partner content brands.
In May, Plex announced a partnership to extend its free content library with Crackle, Sony‘s streaming platform that left Latin America last year. The association between the two platforms is initially limited to the United States, but a statement on Plex’s website says international markets will also see an improvement in free content in the near future. It is this new library of thousands of films and shows, including titles such as Captain Phillips, Hell’s Kitchen, and 3rd Rock From the Sun that can make the service really grow.
Well-known as a media server to organize and stream personal media collections, Plex launched its free, ad-supported streaming service in the U.S. and 220 more countries. In Latin America, the service it’s available in Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Venezuela.
Catalog versus originals
Disney’s Hulu, which should arrive in Latin America in 2021, following Disney+ debut in the last quarter of this year, also bets on the ad-supported as a part of its business model–last year, Hulu SVP of advertising Peter Naylor told Variety that about 70% of its total audience is on its ad-supported plan.
For some years, Hulu stood behind Netflix and Amazon Prime Video when it comes to originals. But this changed with The Handmaid’s Tale massive hit. Based on Margaret Atwood’s classic novel, this series debuted in 2017, won Emmys, and propelled Hulu to a new level. After that came other successful productions, such as the teen comedy PEN15, Ramy, a series made to make you reflect on life, and the adaptation of the novel by the Irish author Sally Rooney Normal People.
Beyond its own originals, Hulu also has a great catalog that, since March, includes FX’s original series. This was possible because Disney acquired 21st Century Fox and made a deal with NBCU, which gave the company operational control over Hulu.
Netflix has hundreds of thousands of content options in its catalog. Still, it launched more than 300 original productions in 2019, which indicates that, yes, exclusive content is important. Hulu does not reveal the size of its catalog–some consultants estimate it to be somewhere between 2,000 and 3,000 titles.
The great asset of Disney services, however, may be in Disney Bundle, the subscription package offered in the U.S. which brings together Disney +, Hulu, and ESPN + all at once, and at a lower price ($12.99) than subscribing to the services separately ($17.97). Something like this can also work with Latin Americans, who are quite used to buying products and services in combos.