Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Wednesday, August 17, 2022

Pay TV market seeks to evolve hand in hand with new technologies

The significant progress made by streaming in recent years has led operators to remodel and transform their products in order to capture a user who has multiple and varied offers at its disposal.

With less than 15 million subscribers in mid-2022, levels similar to those of a decade ago, the Brazilian pay TV market, which was once a bastion in Latin America, is struggling with a series of situations and problems, largely as a result of new global trends in viewers and the advancement of new technologies, especially with the growth of broadband.

Although the progress of streaming began some years ago, with the improvements introduced in broadband networks, such as FTTH, 4G at the time and now 5G, the emergence of OTTs such as Netflix, YouTube, Disney+, Amazon Prime Video and other similar ones led to an acceleration in the adoption of streaming, which was further accentuated by the outbreak of the Covid-19 pandemic.

In this way, currently in Brazil there are only 2.4 million households that only have pay TV contracts, which represents a drop of 23% compared to those existing in 2015; while 12.1 million households, in addition to pay TV, have streaming, which in this case means an increase of almost 25%. In turn, there are around 40 million households that do not have either of these two services, according to data from the consulting firm BB Media.

Also, and especially during the pandemic, there was a significant increase in the hours consumed by users of streaming platforms. In 2018 the average in Brazil was 2.68 hours, while in 2022 it reached 3.30 and only taking into account the platforms contracted by users.

All this has led the main pay TV operators in the country to look for alternative methods and the solution was to put into practice the famous phrase: “If you can't beat your enemy, join him”. Today, most of the main pay TV operators have linear channels (on line) many of which still keep the format of the old pay TV.

During the Pay TV Forum 2022, several of the participating executives agreed that there is already a subscriber base of between 700,000 and 800,000 subscribers to its streaming channels, a figure quite similar to that lost by the traditional pay TV service during the last 12 months.

However, this migration that has been observed does not have the same reflection on the operators' revenues since the ARPU of streaming services is still significantly lower, according to Claro's CMO, Marcio Carvalho, at the aforementioned event. However, for this executive, the biggest problems of traditional pay TV derive from the regulatory asymmetries existing in Brazil regarding streaming and the strong competition that exists in the broadband service, where there are currently more than 9,000 players.

Streaming difficulties. Of course, not everything is happiness for streaming, especially after the pandemic. With the flexibility, people took on new consumption habits, devoting fewer hours to TV and streaming, to which was added the increase in pirate platforms and the growth of sharing, that is, the shared use of passwords for the use of a service and the growth of more than 100% in the consumption of free streaming services with advertising (AVOD).

According to data from BB Media, the penetration of online content consumption in Brazil went from 86% in 2021 to 82% in the first quarter of 2022, while password sharing was observed in 40% of Netflix and HBO Max users, in 39% of subscribers to Globoplay, 35% in those of Disney+, among others. This is the main reason why Netflix decided to make restrictive changes, worldwide, regarding the use of access codes. This situation is also considered as a type of piracy to combat.

Within this framework, operations against traditional piracy were also increased in Brazil, which in addition to seizing equipment from illegal transmission systems, also included pirate content distribution sites. The Alliance for Creativity and Entertainment (ACE) for Latin America recently reported that in Brazil they managed to remove 10,000 links in search engines and 1,400 illegal services that existed in 2019, now there are only about 240 left.

In addition, a few days ago the Agenia Nacional de Telecomunicciones (Anatel) (Telecom regulator) and the Agencia Nacional del Cine (Ancine) (National Film Agency) signed a cooperation agreement to combat piracy, by which both institutions will work together to dismantle the networks of illegal retransmission of audiovisual content. through the Internet, based on the administrative blocks of those illegal sites.

The concrete thing is that the progress made in connectivity in Brazil in the last four years, largely due to FTTH, has caused a "revolution" in the pay TV, streaming and content markets, all of which leads to the creation of new models to be able to take full advantage of the possibilities offered by new technologies.

 

 

 

 

 

                                                          

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