Streaming services to surpass pay-TV in Latin America in 2020

. Jun 08, 2020
Streaming services to surpass pay-TV in Latin America in 2020 Image: LABS

The streaming war is a global fight, but the next 12 months will be crucial for regional battles in Latin America. Not only will the region receive two new platforms from media big-hitters, capable of going toe-to-toe with hegemon Netflix, but also the number of subscribers to this type of service is set to exceed the traditional pay-TV customer base for the first time in history.

Latin America is expected to end 2020 with 62.2 million subscribers to streaming video services, a 36-percent increase on last year’s figures. Even more impressive are the projections for the near future. By 2024, the region should have 110.7 million users on these platforms — which, in industry jargon, are known as OTT, or over-the-top, a term used to designate the offer of audiovisual content over the internet.

</p> <div class="flourish-embed flourish-chart" data-src="visualisation/2740181" data-url=""><script src=""></script></div> <p>Pay-TV via cable or satellite, in turn, will remain stagnant at its current level of 57 million subscriptions, having plateaued in 2016. This data was passed on to LABS by Ampere Analysis, a market research firm specializing in media, content, and communications.</p> <p>&#8220;Latin America is expected to be the second-fastest-growing region in terms of the proportional increase of the subscriber base in the next 5 years, with the subscriber base more than doubling from 2019 to 2024, second only to Sub-Saharan Africa, where current subscriber numbers and penetration is relatively very low,&#8221; says Lottie Towler, senior analyst at Ampere Analysis.</p> <p>The growth is closely linked to the debut of platforms backed by media and technology giants. The Disney+ service will launch in Latin America in the last quarter of this year, while HBO has identified the region as a priority, set to make it the first market outside the U.S. to receive its new HBO MAX service in 2021.</p> <p>Both platforms offer huge catalogs to compete with already established services. Netflix is ​​expected to maintain its spot on top of the pile, but the competition it will face will be heavier. Meanwhile, <a href="">Amazon Prime Video</a> and Apple TV+, which have been operating in Latin American countries since 2016 and 2017, respectively, are unlikely to be passive spectators. Regional platforms, such as Claro Video, Blim TV, and Globoplay, will also make important moves in the field, whether by trying to grow their own bases or establishing coveted partnerships for content distribution.</p> <p>Digital TV Research, a consultancy that provides business intelligence for the television industry, predicts that the five major global streaming platforms — Netflix, <a href="">Amazon Prime Video</a>, Disney+, Apple TV+, and HBO Max — will dominate 88 percent of streaming subscriptions in Latin America by 2025. The firm estimates that the subscription segment — or SVoD, for Subscription-based Video on Demand — excluding advertising-based services — AVoD, Advertising-based Video on Demand — will reach 106 million customers in Latin America within five years, a 152-percent increase from 2019.</p> <p>&#8220;Latin America is already very important for Netflix. Brazil is the company&#8217;s second-largest international market [after the United Kingdom]. And it is crucial for the main platforms to have original content. If you are Netflix, for example, and you have 31 million-plus subscribers in Latin America, you want to keep them happy. There has been quite a lot of investment in several countries around the region as I understand it,&#8221; said Simon Murray, principal analyst at Digital TV Research, in an interview with LABS.</p> <h2>Investment in local content</h2> <p>In addition to growth in the number of subscriptions, the first half of the 2020s is likely to be a period of heavy investment in local content. The big platforms are likely to <a href="">expand their portfolios produced in Latin America</a>, with a growing selection of TV series, films, and <a href="">documentaries</a> in both Spanish and Portuguese.</p> <p>The movement is already clear: 15 percent of the films and series recently announced by Netflix and Amazon Prime Video — the two major international platforms already established in the region — will be in Spanish or Portuguese, according to Ampere Analysis, which tracks the content commissioned by major services. A part of these programs are produced in European countries, mainly Spain or Portugal, but they have great appeal among the Latin American audience.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/2740379" data-url=""><script src=""></script></div> <p>&#8220;Platforms are investing quite a lot to make their offerings more localized in these regions, which will provide more competition for the local platforms, as that&#8217;s one area in which they have been able to differentiate themselves by offering local, regional content,&#8221; says Ms. Towler.</p> <p>On the other hand, regional investment can bring good global results. Ampere, which tracks Netflix&#8217;s top 10 charts in 60 countries, has noticed an increasing interest in Spanish-language shows. &#8220;A number of titles, such as Money Heist, have been really successful not only in Spanish-language countries but also in other markets,&#8221; notes Ms. Towler.</p> <div class="flourish-embed flourish-table" data-src="visualisation/2764002" data-url=""><script src=""></script></div> <h2>Homegrown streaming competitors</h2> <p>Global media giants will come up against stiff local competition in Latin America, represented mainly by major TV networks or mobile telecom companies, such as Globo (Brazil), América Móvil and Televisa (Mexico), and their respective streaming services Globoplay, Claro Video, and Blim TV.</p> <p>But regional platforms will face an uphill battle, as global services tend to follow in the footsteps of Netflix and produce a smaller proportion of their content in the U.S. and increase internationally commissioned shows and movies. &#8220;When it comes to local services, obviously, the challenge is the budgets they have. It&#8217;s hard to compete with the giants when they&#8217;re investing so much in their own, original content,&#8221; reckons Ms. Towler.</p> <p>According to Mr. Murray, of Digital TV Research, there is room in Latin America for other formats, such as what he calls &#8220;import platforms,&#8221; which usually aggregate pre-produced content. &#8220;I am surprised that Televisa and Globo, for example, haven&#8217;t got more into this than they have done given the content that they have. Obviously, they have existing deals with broadcasters and pay-TV operators around the region that they don&#8217;t want to spoil, but you would think that those two companies are ideally placed to explore the AVoD market.&#8221;</p> <p>According to the consultancy, Claro Video will continue to be the largest local player, going from 2.7 million to 4.5 million subscribers until 2025, but all regional services should face difficulties in gaining new subscribers. Blim TV and Movistar Play, which is controlled by Spain&#8217;s Telefónica, will grow little — the former from 297,000 to 600,000 users, the latter from 392,000 to 800,000. Digital TV believes a lot more people will receive these platforms for free, as added features to premium subscriptions in mobile or pay-TV sectors. Brazilian GloboPlay does not disclose any concrete numbers on users or subscribers and therefore international consultancies do not track its progress.</p> <h2>The pandemic and digital services</h2> <p>In addition to new services, the search for convenience, and technological developments, the Covid-19 pandemic has offered another boost in demand for digital services in general, including in Latin America. Measures of social distancing have led people to seek more entertainment at home and it is unlikely movie theaters will be able to open and function as normal any time soon.&nbsp;</p> <p>JustWatch, a streaming guide that monitors the sector in 46 countries, identified an explosion in the use of platforms in the two largest markets in Latin America. In Mexico, between March 15 and the first half of May, HBO Go has seen its traffic quadruple, while Amazon Prime Video more than tripled, and Netflix recorded a 188-percent growth in use. In Brazil, even in a shorter observation period, from early April to mid-May, increases were above 100 percent across the board, with Amazon users accessing the service almost three times as much as before.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/2764359" data-url=""><script src=""></script></div> <div class="flourish-embed flourish-chart" data-src="visualisation/2764922" data-url=""><script src=""></script></div> <p class="has-text-align-center"><em><a href="">This article was originally published on LABS – Latin America Business Stories, a news platform covering business, technology, and society in the region for an English-speaking audience.</a></em></p> <figure class="wp-block-image size-large"><a href=""><img loading="lazy" width="1024" height="124" src="" alt="" class="wp-image-41934" srcset=" 1024w, 300w, 768w, 610w, 1320w" sizes="(max-width: 1024px) 100vw, 1024px" /></a></figure> <p class="has-text-align-center">

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João Paulo Pimentel

João Paulo Pimentel is an editor at LABS. A journalist from Curitiba, Brazil, covering technology and business since 2004, he studied Media & Digital Communications at Erasmus University in the Netherlands and has worked as an editor and executive editor at local news outlets.

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