New Customer Behavior, Broadband Deployment, and Smart Devices to Drive the Pay TV Environment

Young consumers with evolving viewing habits, the prevalence of broadband services, and rise of smart devices have changed how television operates. This market insight research service analyzes non-linear pay tv services in Latin America and highlights how new consumer behavior is influencing the market. It benchmarks the competitive landscape and provides insights into effective market strategies for the region. Countries include Mexico, Colombia, Venezuela, Argentina, Chile, and Brazil, with a special emphasis on Brazil. The base year is 2012 and the forecast period is 2013 to 2017.

Key Findings

•Broadband growth is a big driver for connected products and mobility.
- The market, fixed and mobile, is still in a growth phase.
- In Brazil, fixed broadband penetration is going to double in the next 3 years.
- Mobile broadband growth is a substantial driver of smartphones.
•Latin America, like the rest of the world, is experiencing a “boom phase” for connected and smart devices.
- Connected and smart devices are changing traditional consumer behavior and shaping how young consumers demand and absorb content.
•On-line and non-linear content is becoming more popular with this new behavior.
- Advertisers and content delivery network (CDN) providers are already investing in these new channels.
•Within in the non-linear market, plenty of opportunities and room to grow exist for participants; the market is, indeed, both dynamic and growing quickly.

Research Objectives, Scope, and Methodology

Objectives
•Analyze the drivers of market growth for the non-linear pay TV services segment.
•Highlight new consumer behaviors.
•Provide benchmarking for the competitive landscape.
•Provide market participants insights for an effective value-added strategy.

Scope
•Geographic coverage: Latin America (Argentina, Brazil, Chile, Colombia, Mexico, and Venezuela), with an emphasis on Brazil as it represents over half of the Latin American market revenue and number of subscribers.
•Forecast period: 2013–2017
•Base year: 2012
•Monetary units: US dollars

Research Methodology
•Secondary research: Frost & Sullivan’s online database, market participant reports, and media groups.

Key Definitions

Cable TV
Cable television is a system of pay TV programming distributed by radio frequency through coaxial cables or hybrid-fiber coaxial cables.

DTH Satellite Television
Direct-to-home (DTH) satellite television services, which consist of a digital and encrypted set of programming, are broadcasted over a high-power satellite in the Ku-band frequency and are received directly by consumers with small satellite dishes and set-top equipment. Some markets, in particular the United States, call this direct broadcast satellite (DBS) service. However, satellites that are dedicated only to DBS service, such as DIRECTV and Echostar satellites, are not considered in the forecasts for this research service because operators in Latin America have not leased out capacity from these satellite providers. DTH is typically a point-to-multipoint application and entails long-term (multi-year) transponder leases.

MMDS
Known as both multichannel multipoint distribution service or microwave multipoint distribution service (MMDS), MMDS is a special service mode, which uses a microwave range to transmit signals to be received at certain points within a given area.

IPTV
Internet Protocol television (IPTV) service is a broadcast of live TV and video-on-demand (VoD) via an IP network. In general, the service is accessed by a user through a household connection to broadband Internet. A set-top box can be used to access the service through a traditional television.

OTT
An over-the-top (OTT) service is a communication or entertainment service that is delivered over a broadband Internet connection. Such services include voice-over-IP (VoIP) telephone services, streaming video, streaming audio and music services, and other video applications.

VOD
Voice on demand (VOD) refers to a virtual video rental system in which a film or a television program can be rented by remote control and watched at any time. The service introduces a new, non-linear way of watching television. It is unlike a traditional system in which the viewer depends on a fixed schedule that is arranged linearly to create his or her program schedule. In other words, the viewer sets his or her own grid programming.

DVR
A digital video recorder (DVR) is an electronic device that records video and pay TV content in a digital format and that is being commercialized under a hardware-as-a-service model with monthly fees.

HDTV
High-definition television (HDTV) refers to video that has resolution substantially higher than traditional television systems. It also varies in frame pixel size, scanning system, and frame rate.

Triple Play
Triple play is a marketing term for the provision of high-speed Internet access, pay TV, and fixed telephone in a service bundle.

Quadruple Play
Quadruple play is a marketing term for the provision of high-speed Internet access, pay TV, and fixed telephone in a service bundle that also adds mobile services.

The pay TV services market is segmented by the technologies that were available in each market in 2012.
Pay TV services are provided using DTH, cable TV, MMDS, and IPTV.

Argentina
•Cable TV
•DTH

Brazil
•Cable TV
•DTH
•MMDS
•IPTV

Chile
•Cable TV
•DTH
•IPTV

Colombia
•Cable TV
•DTH
•MMDS
•IPTV

Mexico
•Cable TV
•DTH
•MMDS
•IPTV

Venezuela
•Cable TV
•DTH
•MMDS

Revenue
Revenue presented in this service is net revenue obtained directly from the written or electronic information of service providers, financial reports, or primary interviews with service providers.

Exchange Rates
the US dollar is the official currency used for this service to measure revenue.

Forecast
Among others metrics, revenue and number of subscribers are projected from base year to end of forecast period, 2012 through 2017. The revenue forecast uses exchange rates from the base year, 2012.

Research Methodology
Frost & Sullivan conducted primary interviews with key executives from different areas (marketing, strategic planning, market intelligence, product development, and services) within the most important service providers in Latin America. Extensive secondary research was conducted over 2 months throughout Frost & Sullivan’s internal database and with other public information sources, such as financial reports, industry associations, statistics agencies, and specialized Web sites.

Table Of Contents

Table of Contents
Executive Summary 4
Introduction 6
The 3 Pillars of Non-linear Evolution—Broadband, Smart Devices, and OTT Services 14
Changing Customer Behavior 22
Impacts on the Pay TV Industry and its Competitive Landscape 26
Selected Case Studies 35
Conclusions 40
Appendix 43
The Frost and Sullivan Story 46

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