Disney channel or Disney+: how are broadcasters tailoring their offers to the shifting customer demands?

The two major American content providers Disney and Warner Bros. Discovery both launched OTT offers in Latin America in recent years, starting first with Disney+ in November 2020 and Star+ in 2021 in Latin America. Indeed, Disney gained control of the three-decade-old Star brand as a result of its acquisition of 21st Century Fox. As more and more content is now available on demand, these broadcasters along with the locals, have been adjusting their lineup of channels to balance it with their OTT offers, with different strategies. On their side, Pay TV operators like Claro, DirecTV or Totalplay have been pushed to revamp their offers to remain competitive. How are Pay TV operators, American and local broadcasters adjusting their strategy in Latin America to address all segments of their customer base?

TV Broadcasters are balancing their lineup of channels with new OTT offers

We are covering more than 400 unique channels in Latin America (this figure does not include religious, local and adult channels).

The distribution of channels is highly concentrated in the region, with only 135 groups operating TV channels (against 550 in Asia Pacific for instance). On top of that, the top 10 ranking gives the lion's share to American players with global expansion strategies, while medium local players often operate one or two channels in their portfolio.

Looking at the variety and quantity of channels in its lineup, WarnerBros. Discovery remains first with 39 channels. The group has chosen not to reduce its offering but either to keep its channels, rebrand them or replace them. They, for instance, replaced Boomerang with Cartoonito at the very end of 2021, entering the preschool segment as a company producing original content. They recently announced the closing of TBS Channel, to be replaced with TNT Novelas, as part of a global trend of American broadcasters trying to meet with Latin American consumers’ prevailing preferences.

Indeed, the American networks had been offering mainly US-based channels in Latin America, meaning channels with almost identical programming as in the US, but dubbed in spanish, and with very few regional shows. In 2022, 77% of WarnerBros. Discovery’s channels in its lineup were based on US content programming only, vs 70% for Disney.

Meanwhile, The Walt Disney Company shut down 5 of its linear Pay TV channels in 2022: Nat Geo Kids, Nat Geo Wild, FXM, Star Life and Disney XD, in order to increase the convergence of the businesses run by the company between Disney+ and Star+. However, the group continued to give a relative importance to its linear channels as the content from both Nat Geo channels are not exclusively distributed on Disney+ but airing on the third National geographic linear Pay TV channel.

Yet, the above ranking hides slight disparities between countries, where more local strategies are taking shape. For a given broadcaster, the number of channels available isn’t the same in each country. Artear (owned by Clarin) and TelevisaUnivision are two regional operators crossing borders with channels distributed in other spanish-speaking countries with, for the latter, 10 out of its 18 channels being available outside Mexico.

WarnerBros. Discovery is still the most distributed network of channels in Latin America

Looking at the ranking of channels in terms of reach, WarnerBros. Discover owns 4 out of the 5 mostly distributed Pay TV channels regionally, taking advantage of the shut down of Disney XD. Regarding the most popular genres, across the region, 26% of the channels are Movies & Fictions, 15% are Generalist, 11% are Sports and 10% Kids. Among the most selected channels shown above, kids channels are still very popular on linear TV and take on half of the top 10 channels in the region. This attractiveness leads operators to launch new tailored channels for kids. In this respect, NBCUniversal launched Dreamworks channel, a new kid-focused channel, in January 2022 in Latin America, adding it to its portfolio of US-based channels.

Yet, this outlook hides the ever-increasing importance of sport as a linear content, which is at the heart of local Pay TV operators’ strategies. Helding the official rights to broadcast all 64 matches of the FIFA World Cup 2022 live in Argentina, TyC Sports was the most distributed PTV channel in the country in 2022. In Mexico, Fox Sports was the most distributed channel, following its forced-acquisition by Grupo Multimedia Laumann from Disney in November 2021, due to Mexican legal restrictions resulting from its merger with Fox.

Pay TV operators are filling up their offers with channels available in different video standards and remodeling their packages to remain seen as premium

The launch of OTT and the global decline of subscribers in Cable and DTH in the region has pushed operators to remodel their offers. From an overall perspective, the average quantity of channels per operator has been stable over the years, or even increasing in some cases, but a closer look indicates that the average number of unique channels available per bouquet has been decreasing. For instance, in Mexico, there were on average 109 unique channels per Pay TV operator in 2021 (Cable, DTH, IPTV combined), down to 104 in 2022. Generally, DTH operators offer the biggest number of channels (often +200) but a lot of them are duplicates. Indeed, to fill their offer of linear channels and keep it relevant, operators provide second versions of its channels with signals in SD or HD.

On the other hand, operators are aiming to premiumise their content and have increased the number of Basic Expanded channels and Premium channels available, especially in Argentina and Brazil, countries where television reaches the highest penetration among households in the region (97% and 96% respectively), while operators in Colombia or Peru still rely on cheaper packages with a high quantity of basic channels.

On top of that, on average between 2021 and 202, Latin American operators have added 2 OTT services available as an Add-on or packaged. Indeed, Cable, IPTV and mostly OTT Pay TV operators such as DirecTV Go are distributing more and more SVOD services and turning into content aggregators. The operator is now distributing more than 15 different platforms in Latin America, with specificities according to the country and offering the OTT of the US media giants such as Disney+, HBO Max, Paramount+, Lionsgate+. Also, DirecTV Go refurbished its packages of channels in 2022 in Latin America and now offers two plans in most of the countries, with a Plan Full including more premium channels.

With operators trying to lift up its premium contents to stay competitive, more and more 4k channels are on the way, as evidenced by the recent launch of AMC Selekt 4K in Latin America, offering content of AMC (movies, series, docs…) in 4K to match the growing number of people receiving this quality standard (roughly +30% on average between 2021 and 2022 in the selected countries). In Mexico, Totaplay has been offering 300+ channels packages including more and more HD and 4K channels.

A new trend, led by DirecTV, has been the launch of original channels. Owning the broadcasting rights for the PFL and local football championships, DirecTV launched DSports on satellite and via DirecTV Go in Brazil and Mexico in April 2022, followed by DirecTV News in July 2022. Those channels were initially exclusive content for DirecTV, but could tend to be licensed to other operators. Indeed, D News closed its first agreement with the Argentinian cable operator Telecentro. For operators, betting on live content and leaving on-demand content to the streamers proves to be a costly, yet needed way to differentiate and pursue the objective of keeping their offer premium and attractive.

Lucas Launay|Analyst at Dataxis

This research highlight is based on our data coverage of OTT and Video and TV Distribution in Latin America. Please contact us to get a demo and see the depth of our service. This topic will also be addressed during Nextv Series Mexico, the event about the innovation and transformation of the main players of the new streaming industry in the country: Pay TV operators, TV networks, broadcast TV broadcasters, OTTs, Telcos and ISPs.

Lucas Launay

Analyst at Dataxis

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Published on: Tuesday, 27 June, 2023

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