 LATAM | CASE STUDY |
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Pay TV's offer is increasing on par with new HD networks and platforms. The region's main operators are raising the bar to engage new subscribers and face new challenges.
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Each week, the main pan-regional distributors announce the launch of new HD networks, something that's offered by the different operators in their Premium packages.
But it's not only HD networks subscribers search for. In fact, companies such as DIRECTV, HBO, ESPN, Moviecity or DLA are providing access to platforms which can improve subscribers' experience significantly, while promoting the pay TV industry in general.
The thing is, other than the region's main MSOs; are the region's operators actually able to provide the range and infrastructures necessary to satisfy the growing pay TV industry's new needs?
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This is actually one of the main challenges currently present in the industry. DIRECTV seems to have solved this a few months ago, when it acquired to new satellites for a total of US$ 1 billion.
"This deal makes our platform one of the best on a pan-regional level with a great potential for future growth. It also reflects how confident we are about the region," said Bruce Churchill, President and CEO of DIRECTV Latin America back in September, 2011.
After the company's financial results for the first quarter of 2012 were announced, the deal seemed to have paid off: "DIRECTV delivered another strong quarter of financial and operating results highlighted by double-digit revenue, EPS and cash flow growth, fueled in part by another quarter of record-setting subscriber growth in Latin America," said Mike White, president and CEO of DIRECTV. "Our industry leading revenue and earnings growth continues to be driven by the strength of our premier brands, popularity of our differentiated product and service offerings, and an enhanced focus on achieving operational excellence through effective cost management."
HD NETWORKS
According to the information published in ttv's Yearbook 2011/2012, the Latin American market currently has close to 40 HD channels, offered partly by the region's main operators. Some of these channels, such as Moviecity Premiere or HBO HD, are distributed independently. The region is witnessing a boom in HD networks, with Discovery Home & Health, Investigation Discovery, Channel HD, Rush HD by DLA, el Canal de las Estrellas Latin America, Pasiones Latin America and BIO, as some of the latest to be released.
What about cable operators? How do they face their networks' saturation, due mainly to this increase in HD channels? In fact, operators will see their networks' capacity decrease, as more and better packages make their way to the region.
A report recently published by Ericcson reveals that data traffic, particularly video, is expected to grow 15-fold by 2017. According to the company, the demand for high-speed Internet access means operators will have to build new 4G networks to cope.
"This revolution is driven by smartphones, by video, by cloud-based services, the Internet and end-to-end connectivity," Johan Wiberg, head of Ericsson's networks unit.
Pay TV operators are now faced with two options: either a very expensive upgrade for their network, or eliminating their analog signals. In fact, for every analog signal, you get ten SD networks and four HD; and just two if their sports networks.
Concentration seems, in this scenario, as the most viable option. Concentration as far as networks' distribution and operators, in order to reduce costs and exploit new key segments in the industry.
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