Latin America’s low-income homes enter pay-TV’s crosshairs

With pay-TV penetration of Latin America’s wealthier homes approaching saturation point, the region’s operators are beginning to target lower-income households, according US consultancy Frost & Sullivan.

Higher investments by cable TV and IPTV operators are expected to encourage all market participants to stretch their services beyond urban areas and cover the underserved small and medium cities too.

Inter-operator competition in Brazil, Chile, Colombia, and Mexico is also expected to improve the availability and quality of services, add value to service offerings, and enhance price points.

Frost & Sullivan is now predicting that as a result of all this, Latin America’s pay-TV market will nearly double over the next six years from US$15.23bn in 2011 to US$28.75bn in 2017.

The merger of the fixed and mobile operations of América Móvil and Telefónica in several countries is expected to give extra impetus to the adoption of service bundles that include TV, telephony and broadband in several countries in Latin America.

“The entrance of telecommunications companies will intensify competition in the market,” said Guilherme Faggion, research analyst at Frost & Sullivan.

“The emergence of IPTV services in all the countries in Latin America; the launch of hybrid DTH, IPTV, and digital terrestrial television set-top-boxes; as well as the deregulation of cable TV in Brazil are likely to solidify this trend.”

However, the heavy tax burden on pay-TV services, particularly in Brazil, and the difficulty of obtaining return on investment (ROI) from the implementation of networks in distant geographic areas and small cities is currently challenging operators’ ability to gain scale and offer convergent services over networks.

The over-the-top (OTT) video market is not thought to currently pose a threat to the region’s pay-TV market, but that may change, depending on the quality of broadband offerings, applications with attractive content for the Latin American market, and installed base of video games and Smart TVs.

“Investments in wireless technologies and hybrid set-top-boxes will aid the offer of lower-priced services aimed at low-income users,” noted Faggion. “This will considerably enlarge the subscriber base and open up additional revenue streams.”

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