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2011 Latin America - Digital Media and Pay TV Market

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Last updated: 19 Oct 2011 Update History

Report Status: Archived

Report Pages: 92

Analyst: Lucia Bibolini

Publication Overview

This report covers developments in the Digital Media and Pay TV Markets across Latin America and the Caribbean.

The countries covered in this report include: Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Puerto Rico, Uruguay, Venezuela, and the small Caribbean island nations.

Researcher:- Lucia Bibolini, Lawrence Baker
Current publication date:- October 2011 (10th Edition)

Executive Summary

Growth in satellite TV prompts resurgent investment in CATV infrastructure

Across Latin America the slow but steady investment in telecom infrastructure in recent years has enabled operators to capitalise on their improved capabilities, and so offer a range of bundled services. Depending on local market developments, these traditionally incorporate combinations of fixed-line and mobile telephony, broadband, IPTV, VoIP and VoD. Double-play offers (fixed-voice and broadband) make up the bulk of the bundled services subscriber base, followed by triple play offers.

Bundled offers are popular business models among telcos since they serve as anchors in their bid to retain customers, lowering churn rates, while for customers the ease of billing and the cost effectiveness of bundles serve their interests. Regulators are equally attracted to the proposition since services promote competition and encourage telcos to invest in infrastructure. Considering that in most countries incumbents still dominate the fixed-line and DSL sectors, this convergence of services has been actively encouraged. With poor take-up of LLU, despite regulatory efforts in recent years, competition in the broadband sector, and thus for associated services such as VoIP and VoD, has depended on cross-platform offers from cable broadband operators.

Cablecos – being able to offer broadband and telephony on upgraded networks – have thus become serious competitors to the region’s incumbents for bundled services. In many instances they are the only players investing in network infrastructure, while upgraded cable technologies can potentially provide a better service than many DSL alternatives. Although cross-platform competition has thereby emerged in many markets, it has similarly led to ongoing legal and regulatory disputes among players, exacerbated by the vested interests among some political elites to preserve the revenue and market shares of incumbents. Nevertheless, the market share of cablecos for broadband access has risen steadily during the last few years.

CATV operators and broadcasters in Latin America have a natural advantage in that TVs in the region are a ubiquitous part of life, and almost every home has its own set. CATV networks are steadily being updated to digital services: this has addressed TV piracy to some degree, provided a larger number of channels to be distributed, and released sub-1GHz spectrum for other telecom services. Despite such progress, the DTTV market continues to be marred by disagreements over a preferred regional standard, with the result that countries have adopted incompatible systems based on geo-political considerations: Mexico, Honduras, and El Salvador have adopted the ATSC standard while Uruguay and Colombia chose the DVB standard and Argentina, Brazil, Chile, Peru, and Venezuela adopted the SBTVD standard.

Argentina

Argentina enjoys one of the world’s highest penetration rates for pay TV, with more than three quarters of households subscribing to services. The mature market is seen in the uncharacteristically even distribution of take-up, with penetration in the major cities only slightly higher than in the rest of the country. The 2009 Audio-Visual Communications Law opened up the pay TV market to telecom cooperatives which they can bundle with telephony and internet access. A number of such cable TV licences were issued during 2011, dramatically changing the sector’s competitive landscape.

Brazil

The Brazilian pay TV market has shown strong growth in recent years, and by early 2012 should reach about a fifth of all households. The once dominant CATV sector has gradually lost market share to a surging satellite sector, particularly since three operators joined the market in recent years to compete with the former monopoly provider Sky Brazil. DTTV broadcasts were launched in late 2007 and should be available in all municipalities by 2013. Some analogue broadcasts will remain in tandem until full ASO is undertaken in mid-2016.

Chile

Chile has been at the forefront of the region’s developments in digital media, having been the first local market to see the launch of IPTV. The pay TV market is among the most mature locally, with more than a third of households subscribing to services. This is partly due to the involvement of international operators having considerable know-how and experience in a range of markets: the cableco VTR is controlled by Liberty Global, while Movistar has the backing and experience of Telefonica’s European operations behind it, and Claro is owned by the regional powerhouse América Móvil.

Mexico

The development of digital media in Mexico has been helped by alliances among players to deliver services. These include the fixed-line provider Maxcom adding its services to those of the cableco Sistemas Interactivos de Telecomunicaciones, Axtel teaming up with the cableco Cablemás, and Bestphone partnering with the cableco Megacable.

The potential market growth in Mexico is significant: Megacable, Cablemás and Cablevisión together had over 1.3 million cable broadband subscribers by mid-2011 and more than three million TV subscribers, with an addressable market of more than six million homes passed.

Markets highlights:

  • Guatemala had some 1.3 million cable TV subscribers in mid-2011: although per capita penetration is 9%, about a third of households can access services despite wide discrepancies between regions. Growth potential is significant given the slow development of competing DSL access.
  • Honduras has a proportionately small TV market with poor DSL infrastructure to support bundled services. Yet relatively high CATV household penetration means that operators have a solid foundation on which to develop offerings given sufficient investment. Prospects for cable services are sound in the long term, partly because in many areas terrestrial broadcasts are inhibited by topographical limitations. The result is that cable TV has become very popular in many rural areas.
  • The estimated 860,000 subscribers to VoIP services in Mexico in mid-2011 compares to only 40,000 in 2006. The anticipated growth in the market during the next few years will affect fixed-line revenue for the incumbent Telmex, compounded by the continuing shift among subscribers for mobile-only services.

Estimated Pay TV subscribers and penetration rates in select Latin American countries – 2012

Country

Subscribers

(million)

Household penetration

Argentina

8.1

80%

Chile

2.6

48%

Mexico

10.2

38%

Brazil

13.3

25%

(Source: BuddeComm based on industry and company data)

Data in this report is the latest available at the time of preparation and may not be for the current year.

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