The streaming wars are a global fight, but the next 12 months will be crucial on Latin American battlegrounds. Not only will the region receive two platforms of media giants capable of fighting on an equal footing against Netflix, but also the number of subscribers to this type of service will exceed, for the first time in history, the traditional pay-TV customer base in 2020.
Latin America should end 2020 with 62.2 million subscribers to streaming video services, a 36% growth compared to last year’s figures. Even more impressive are the projections for the near future. By 2024, the region should have 110.7 million users on these platforms – which, in industry jargon, are known as OTT, or over-the-top, a term used to designate the offer of audiovisual content over the internet.
Pay-TV via cable or satellite, in turn, will remain stationed in the current range of 57 million subscriptions, after having recorded its peak in 2016. These data were provided to LABS by Ampere Analysis, a market research firm specializing in media, content, and communications.
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“Latin America is expected to be the second-fastest-growing region in terms of proportional increase of subscriber base in the next 5 years, with the subscriber base more than doubling from 2019 to 2024, second only to Sub-Saharan Africa where current subscriber numbers and penetration is relatively very low,” says Lottie Towler, senior analyst at Ampere Analysis.
The growth is closely linked to the debut of platforms backed by media and technology giants. Disney+ will launch in Latin America in the last quarter of this year, while HBO Max is prioritizing the region to be its first market outside the United States in 2021.
Both of them offer a huge catalog to compete with already established services. The pioneer Netflix is expected to maintain its leadership position, but the competition it will face will be heavier. Amazon Prime Video and Apple TV+, which have been operating in Latin American countries since 2016 and 2017, respectively, will certainly not be passive spectators of the fight. Regional platforms, such as Claro Video, Blim TV and Globoplay, will also make important moves in the field, whether by trying to grow their own bases or establishing coveted partnerships for content distribution.
Digital TV Research, a consultancy that provides business intelligence for the television industry, predicts that the five major global platforms – Netflix, Amazon Prime Video, Disney+, Apple TV+, and HBO Max – will dominate 88% of streaming subscriptions in Latin America by 2025. The firm estimates that the subscription segment (or SVoD, for Subscription-based Video on Demand), excluding advertising-based services (AVoD, Advertising-based Video on Demand), will reach 106 million customers in Latin America within 5 years, a 152% increase over 2019.
“Latin America is already very important for Netflix. Brazil is the company’s second-largest international market [after the UK]. And it is crucial for the main platforms to have original content. If you are Netflix, for example, and you have 31 million-plus subscribers in Latin America, you want to keep them happy. There has been quite a lot of investment in several countries around the region as I understand it,” said Simon Murray, principal analyst at Digital TV Research, in an interview with LABS.
Platforms will step up investments in local content
Indeed, in addition to growth in the number subscriptions, the first half of the 2020s is likely to be a period of heavy investment in local content. The big platforms are likely to expand their portfolios produced in Latin America, with a growing menu of series, films and documentaries in Spanish and Portuguese.
The movement is already clear: 15% of the films and series recently announced by Netflix and Amazon Prime Video, the two big international platforms already established in the region, will be in Spanish or Portuguese, according to Ampere Analysis, which tracks the content commissioned by major services. A part of these programs are produced in European countries, mainly Spain or Portugal, but they have great appeal among the Latin American audience.
“Platforms are investing quite a lot to make their offerings more localized in these regions, which will sort of provide more competition for the local platforms, as that’s one area that historically local platforms have been able to differentiate themselves by offering local, regional content”, says Towler, from Ampere.
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On the other hand, regional investment can bring good global results. Ampere, which tracks Netflix top 10 charts in 60 countries, has noticed an increasing interest in Spanish-language shows. “A number of titles, such as Money Heist have been really successful not only in Spanish-language countries, but also in other markets too,” says Towler.
Native competitors will also fight the streaming giants
In all their movements, the giants will encounter local competition, represented mainly by major TV networks or mobile telecom companies, such as Globo (Brazil), América Móvil and Televisa (Mexico), and their respective streaming services Globoplay, Claro Video and Blim TV.
But regional platforms will face an uphill battle, since global services tend to follow in the footsteps of Netflix and produce a smaller proportion of their content in the U.S. and increase internationally commissioned shows and movies.
When it comes to local services, obviously, the challenge is the budgets they have. It’s hard to compete with the giants when they’re investing so much in their own, original content.
Lottie Towler, senior analyst at Ampere Analysis
According to Murray, of Digital TV Research, there is room in Latin America for other formats, like what he calls “import platforms”, which usually aggregate pre-produced content. “I am surprised that Televisa and Globo, for example, haven’t got more into this than they have done given the content that they have.”
Obviously, [Televisa and Globo] have existing deals with broadcasters and pay-TV operators around the region that they don’t want to spoil, but you would think that those two companies are ideally placed to explore the AVoD market
Simon Murray, principal analyst at Digital TV Research
According to the consultancy, Claro Video will continue to be the largest local player, going from 2.7 million to 4.5 million subscribers until 2025, but all regional services should face difficulties in gaining new subscribers. Blim TV and Movistar Play, which is controlled by Spain’s Telefónica, will grow little – the first, from 297,000 to 600,000 users; the second, from 392,000 to 800,000. Digital TV believes a lot more people will receive these platforms for free, as added features to premium subscriptions in the mobile or pay-TV sectors. Brazilian Globoplay does not disclose any concrete numbers and therefore international consultancies do not track its evolution.
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The pandemic and digital services
In addition to new services, the search for convenience and technological developments, the Covid-19 pandemic offers another boost in demand for digital services in general, including in Latin America, and even in the midst of the serious crisis caused by the virus. Measures of social distancing have led people to seek more entertainment in their homes, and there is no prospect of a simple recovery for movie theaters on the horizon.
JustWatch, a streaming guide that monitors the sector in 46 countries, identified an explosion in the use of platforms in the two largest markets in Latin America. In Mexico, between March 15 and the first half of May, HBO Go has seen its traffic quadruple, while Amazon more than tripled and Netflix recorded a 188% growth in access. In Brazil, even in a shorter observation period, from early April to mid-May, increases were above 100% across the board, with Amazon users getting close to tripling their accesses.
