The growth observed in OTT pay TV remains slow in Latin America. At end of 2020, this technology represents almost 1.3 million subscribers; barely 2% of the pay TV market. A review of DirecTV, Telefónica and América Móvil strategies shows the different strategies implemented to change this static situation. Low prices and alliances with SVOD OTT constitute a strong part of these strategies, but this new trend is not yet convincing as the solution that will save pay TV.
With different motivations, DirecTV and Telefónica promoted the development of OTT pay TV. At the end of 2018, DirecTV launched its DirecTV Go platform in Chile and Colombia and gradually added it to other markets. The last one was Argentina, at the end of Q4 2020. DirecTV Go is a product with a price level that, depending on the country, goes from 18% to 40% below the linear offer's price, a difference coming from the lower number of channels included. In the immediate term, DirecTV Go is not expected to replace the traditional DTH like in the US; in fact, the satellites dedicated to the “Pan-American” area still have a useful life of 10 years. For the moment, OTT pay TV has been an instrument to penetrate new countries. In 2020, DirecTV Go launched in Mexico and Brazil where it operates under the Sky brand, has a different shareholding structure, and follows different strategic paths. In Brazil, DirecTV Go's bet was so aggressive that it even offered up to 5 years of HBO free of charge.
Telefónica launched its OTT pay TV platform, Movistar Play, in mid-2018. The Movistar Play strategy aims at improving loyalty in its existing customer base already subscribing to pay TV, mobile postpaid or fixed broadband. For example, in Brazil and Peru, the largest pay TV markets for Telefónica, access to the platform is a cost-free benefit available only to certain types of customers. In the other markets, Movistar Play went one step further and can be picked as a standalone service. In these cases, Movistar Play's price stands below the company's own linear pay TV offer; depending on the country, the difference can reach 60% to 75%. Argentina is a good example to understand how this product fits into the operator's pay TV strategy. In that country, the digital and linear offerings have the same number of channels (97) but the first one costs 75% less. The savings are justified by the fact that the service does not require installation nor boxes.
A shared feature of DirecTV Go and Movistar Play is the number of SVOD platforms included in the offer, from their own platforms to those of third parties. And sometimes these partnerships turn out to be the main commercial argument as most services are offered with a huge promotional discount. But despite that appeal and the low prices, services have yet to explode in terms of subscribers. It could be pointed out that the savings made on pay TV OTT plans evaporate when data costs are counted, resulting in a higher final cost than the linear offer. It is critical for DirecTV as it has a marginal presence on the access side.
At the end of 2020, Brazil unlocked certain regulatory constraints and several important companies quickly announced the launch of OTT pay TV offers: Oi, UOL, Globo, etc. Among them, América Móvil, the leading operator in the market, stands out with its Claro Box TV product. As the name indicates, the company decided to bet on a box, which is a novelty on the market. Today, after two years in service, DirecTV GO also introduced an Android box in Chile in early February. Some Movistar subsidiaries, not all, also have boxes but they are not a promoted option.
América Móvil offers a low priced “streaming box” for broadband clients, $3.7 per month, which grants access to Now, the group's online entertainment service in Brazil that, among other services, includes free subscriptions to Clarovideo and Claro Musica, and some FTA channels. From this initial fee, pay TV packages can be contracted with a 75% discount compared to the linear version. Local media points that the model should continue to improve because some of the most important FTA channels are not yet available and, at the moment, the only major SVOD platforms that can be contracted directly from the box is Netflix. But in the end it does not seem to be the main trouble as FTA can be accessed via free DTT and OTTs via Now. It is still early to comment on the results of this strategy deployed by América Móvil, but the key differentiator could lie in the box in the future.