DTVE Data Weekly: SVOD in Latin America

Latin America has great potential for hybrid ad-supported streaming services and other alternative models, including mobile-only SVOD tiers. In addition, early signs suggest hybrid services are likely to do well in the region. After the launch of Basic with Ads, market leader Netflix has consistently increased its subscriptions in Mexico and Brazil.

Historically, Latin America has tended toward lower-priced TV and video products and services, and in the era of online video, service providers leaning on alternative models, including mobile-only or hybrid ad-supported tiers, are most likely to succeed.

Hybrid plans represent an opportunity for players and consumers. For the players, they represent an additional revenue stream with the opportunity to increase market share by offering a range of plans. For the consumer, they offer a chance to save money on traditional plans. In Latin America, the one-size-fits-all SVOD model popularised globally by Netflix has failed to drive high SVOD household penetration rates comparable to those seen in other mature markets. In 2024, all major global SVODs will launch ad tiers in the region. Although this is a broad international trend, it is appropriate for a region where disposable income has suffered.

The 2020s have seen more diversification of the standard D2C offerings, driven in part by the increasing number of services in the market, ad-supported products, and the remaining factor: consumer spend and disposable income that is struggling to increase in size.

Given the increase in D2C usage versus traditional pay TV since its peak in 2020, SVOD players have increased their pricing because of economic factors such as inflation. In Latin America, operators must introduce their plans at lower prices to drive scale; otherwise, they can struggle to grow. Some examples in other territories are Netflix’s mobile-only plan in India and the former free-mobile plan in Kenya.

High inflation in the region has squeezed average disposable income, leading to an average of two to three subscriptions per household. The existence of alternative plans can ease the pressure on budgets and potentially increase the stacking per home. It is important to consider traditional TV, as it still generates the largest share of TV and video revenue in Latin America, but SVOD and premium video advertising are catching up. On the other hand, there are a few recommendations for operators:

• If offering both alternatives is not an option, stick with one—either mobile-only or ad-supported.
•  Be mindful of ad placement and user viewing experience, regardless of behavioural advertising. • Including alternative plans in your services helps retain customers and reduce churn.
•  Monitor the mobile and connected TV advertising space: both will grow in 2024.

Juan Villegas is Omdia’s Research Analyst, Media & Entertainment