Despite the current economic and political crisis in Brazil, having spent the day at this year’s NexTV show in Brazil last month, it is clear that the Brazilian TV industry is one of the most vibrant TV markets in the world.
Brazil has around 19.5 million Pay TV subscribers and despite a small drop of less than 1% in the last quarter, it is still the biggest market in all Latin American countries. Pay TV growth potential is huge as Pay TV penetration is below 30%. This translated into a lot of excitement at the show, with clear indications of many Pay TV providers looking to expand their footprint in the coming years while complementing, or in some cases even replacing, the core Pay TV offerings with new OTT services.
With an expected expansion of 300% from now to 2018, the Latin American OTT providers are unsurprisingly excited. Early movers in this market and therefore the key players are the global OTT services like Netflix, iTunes and Google Play. However, the large Pay TV providers in Brazil, such as America Movil/Claro, NET, Sky, Vivo/Telefonica, and Oi, are better placed to offer local programs and take advantage of their infrastructure investment within the region. And they are seizing the opportunity to face off the challenge of competing OTT players, by launching their own compelling OTT initiatives. Like other markets in the world, Programmers are starting to offer streaming platforms with authenticated free content from their channel packages PayTV subscription and available on multiple connected devices. Additionally big free to air broadcasters are playing the game, for example Latin America’s biggest broadcast network, Globo, which last year launched it VOD service, offering catch up TV and live events.
There are still some challenges to overcome for OTT market development in Brazil, like the rest of the globe. There remains a certain amount of business model confusion and service fragmentation, as well as pricing and piracy issues. On a local level, Brazil has to battle slow broadband speeds and with most of the population not having access to a credit card, revenue models will not be straightforward.
It is clear however that these are exciting times and it will be interesting to see how the market evolves in the coming years, with economic improvements and Pay TV market consolidation. We will also see a shift whereby millennials will likely become the main customer segment for the Pay TV/OTT industry.