Pay TV market in Latin America to touch $19 bn in 2015: Frost & Sullivan

MUMBAI: The Latin America pay TV services market is set to grow from $9.62 billion as revenue to $19.13 billion by 2015, according to a study by Frost & Sullivan.

The fast-paced growth will be stimulated by increased geographic coverage of cable TV and direct-to-home (DTH) operators.Although pay TV services penetration in urban areas has already reached its peak in Latin America, it is still lower in non-urban areas and small and medium cities.

Investments by cable TV and DTH operators are likely to drive the growth of pay TV services in those under-penetrated areas, according to the study titled ‘Latin America Pay TV Services Markets 2010‘.

Although the currencies of the top-six economies in Latin America - Argentina, Brazil, Chile, Colombia, Mexico, and Venezuela - suffered important devaluations in 2009 due to the global recession, the revenues of the Latin American pay TV services market rose by 4.9 per cent the same year.

"The bundling of services is one of the reasons that helped cable TV operators retain customers during the economic crisis,"Frost & Sullivan industry analyst Renato Pasquini said.

Where cable TV and DTH networks coexist, there is growing competition among operators to improve the availability and quality of services. This has contributed to more innovative service offerings and price reductions.

The entry of telecom operators in the pay TV market will increase the trend of convergence and service integration, causing a proliferation of triple and quadruple-play services, thereby reducing the regular price of telecom services and boosting household penetration of pay TV service, according to the analysis.

As the market is expected to reach a saturation stage in some countries in the coming years, growth rate is expected to decline in the not so distant future. Companies are likely to focus on minimizing the decline of average revenue per subscriber (ARPS), caused by competition and by the expansion of the service with prepaid and lower price offerings, with the development of value-added services, such as video on demand (VoD), high definition TV (HDTV) and pay-per-view (PPV).

To reach distant geographic areas and small cities, pay TV services operators need to make investments that include the costs of licenses, networks, equipment, marketing and sales, the report stated.

The heavy tax burden over pay TV services, especially in Brazil, and the difficulty in obtaining return on investment (ROI) for service providers on the implementation of networks in far flung areas and small cities challenges operators to gain scale and offer convergent services over networks.

Unless the governments come out with incentives and tax reductions that stimulate investments and attract service providers, most operators and cable TV operators

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