LatAm pay-TV revenue growth to trail subscriber additions

Despite expected strong growth in Latin American pay-TV subscriber numbers of more than 16%, revenues are forecast to grow just half as much, as competition between providers — and from OTT services — and bundling of home services combine to constrain video service prices.

A new report from Digital TV Research forecast pay-TV revenues to increase to $19.82 billion by 2021, up from $18.31 billion in 2016, with pay-TV subscriber numbers growing to 83.6 million from 72.0 million in 2016.

DTVR’s Latin American Pay-TV Operator Forecasts, said DirecTV/Sky and Claro/America Movil dominate the Latin American pay-TV, and are expected together to account for nearly half the region’s pay-TV subs by end-2016 and through the next five years.

Nevertheless, pan-regional operators Telefonica/Movistar, Tigo/Millicom and Liberty Global, harbor ambitions to increase their regional market shares.

Twenty-five operators collectively are projected to have 88% of Latin American pay-TV subscribers by the end of this year, and DTVR expects to see a similar distribution of subscribers by 2021. The Top 5 operators, in terms of subscribers, are forecast to be:

DirecTV/Sky (23.3 million).

Claro (17.7 million).

Telefonica/Movistar (6.5 million).

Cablevison (3.8 million). And,

Dish (3.7 million).

There are some sizeable domestic players beyond the pan-regional players. Argentina’s Cablevision (which also has operations in neighboring Uruguay) will climb to fourth place by 2021. Mexico’s Televisa has merged its cable operations into a single entity. The company is also the majority owner of the Sky satellite TV platform.

The 25 operators will continue to take the bulk of pay-TV revenue – more than 90% — for for the next five years.

DirecTV/Sky and Claro together will take 62% of the 2016 total, although this share will fall slightly by 2021.

Earlier this year, DTVR also released a report showing strong demand for over-the-top services, both subscription and ad-supported, estimating OTT revenues would top $3.59B by 2021.

Subscription video on-demand (SVOD) will make up the lion’s share of OTT video revenue in Latin America through 2021, as overall video revenues for the region more than triple from the $1.15 billion in revenue the industry generated in the region in 2015.

SVOD is expected to reach 58% of that total, some $2.09 billion by 2021, up from about $1 million in 2010 and $669 million last year.

Simon Murray, Principal Analyst at Digital TV Research, called 2015 and 2016 “seminal years” for Latin American OTT TV and video.

Brazil, and more recently Mexico, each have seen their economies slow recently, with pay-TV subscriptions in Brazil falling as a result. Mexico, so far, hasn’t felt that pressure.

Stay tuned.

Jim O’Neill is Editor of Videomind and Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn