In recent years, going direct-to-consumer has been a major global trend in the cloud TV and IPTV space. Today, more and more service providers and media companies are joining in, flooding the market with new services, skinny bundles, and TV Everywhere offerings. However, the Latin American TV scene seems to be taking a more old-school approach.
In Latin America, content owners are not flocking to consumers; they are flocking towards cable and satellite companies, bundling their services and content catalogs with traditional pay TV and mobile subscriptions. Out of the top seven SVOD services in LATAM, more than half come bundled for free with an existing service.
Delving deeper, it becomes clear that content owners simply cannot compete with the likes of global services like Netflix and Amazon Prime Video. As a result, local Latin American services like Claro Video and Movistar Play have a substantially lower number of paying subscribers, but they still have large audience figures, with most people accessing their content for free as part of their TV and mobile subscription packages.
So, what’s going on?
Much like the rest of the world, TV in Latin America is going through a transitional phase. While many international content owners and media companies have decided to explore new revenue streams, offering their content directly to their audience, the competition from service providers and international streaming services in LATAM is rough.
When looking at the Latin American TV market, it seems to boil down to two crucial elements which can be found within any full-fledged cloud TV offering, infrastructure and content.
On the one hand, Latin American content owners and media companies are not able to compete with FAANG members, with their massive libraries of international, and even locally produced content, so investing in a standalone app or service to take them head on seems unrealistic, leaving them to continue investing in content. On the other hand, to retain cord cutters or cord shavers, service providers are investing in cloud TV and IPTV services, bundling them in with triple and quad-play offerings, along with internet and mobile, leaving little regarding content creation and production.
As a result, like ripping a page out of The History of Pay TV, Latin American media companies are skipping the consumer and partnering with pay TV operators, offering subscribers free access to their VOD libraries and streaming services. Globosat in Brazil for example, which creates and produces some of Latin America’s most watched programming, is clinging to pay TV operators, only recently offering a direct-to-consumer standalone service. Even established international brands are taking note of the local landscape, with most HBO subscriptions in LATAM coming from pay-TV bundles.
Pay TV operators are not lying down either, with service providers like Cablevisión Argentina and NET investing heavily in their internet delivery system and pay TV services, licensing and acquiring their streamed content. These TV offerings bring together numerous services from a multitude of brands, offering them through a single interface and one monthly subscription.
You could say Latin American pay-TV operators and media companies are sticking with the cable TV model, only now it is online, and instead of premium channels, subscribers now have access to premium apps and services in addition to their standard linear television.
Some of these trends can also be seen outside of LATAM. Netflix comes bundled with BT internet and Virgin Media subscriptions in the UK. HBO, while offering a stand-alone app, still relies on pay TV operators in the US and many other countries, offering the HBO Go app to pay TV subscribers. Amazon has even taken it a step further, offering aggregated TV subscriptions and VOD libraries from a number of services like HBO, Starz, Showtime, Cinemax, and more, in addition to their Amazon Prime Video service, called Amazon Channels.
As the industry continues to evolve, service providers continue to invest in infrastructure, and media companies continue to produce content, we are sure to see more partnerships and content agreements from all over the world, constantly redefining the business models surrounding TV and its content.