You can be on Entrepreneur’s cover!

Exploring New OTT Media Frontiers in Latin America The OTT market is gaining momentum these days, and OTT players are aiming to expand their global presence outside North America and Europe. This is when LatAm comes under the spotlight.

By Daniel Elad

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Pintai Suchachaisri | Getty Images

The digital infrastructure in Latin America is evolving, while demand for streaming entertainment is raging due to the pandemic. Though the OTT (over-the-top) space is relatively nascent there, it is poised for growth. This forces established content providers on par with early-stage publishers to redirect their efforts towards the booming LatAm ground before competitors take root. As for the advertisers, they usher opportunities to diversify their audiences. But why has LatAm become so attractive?

The streaming wars in Latin America

In 2020, the LatAm region had a 27.5% increase in the total number of OTT subscribers, according to eMarketer, with Mexico and Brazil leading the charts. That was a watershed moment for the local media market that suddenly turned into a beachhead location for major U.S.-based streaming companies.

Netflix is currently at the forefront in the region, having the potential to reach 50 million subscribers by 2026, according to Digital TV Research. Yet its international competitors, Amazon Prime Video, Disney+, HBO Max, and Apple TV+, as well as local streaming services owned by major TV networks or telecom companies, Claro Video, Blim TV, and Globoplay, go above and beyond to grab their piece of cake.

Related: Clara becomes the youngest unicorn in Latin America

The competition is also fueled by prices. Netflix's and Disney+'s subscription fees are twice as much as those of Amazon Prime Video or Apple TV+, and three times higher than those of Claro Video. Bearing in mind low credit card adoption being an additional obstacle for global platforms penetrating the market, price, and payment methods are the tools used by local OTT content providers to undercut and compete with streaming gatekeepers.

Despite the fact that OTT growth is a global trend, the Latin American market undoubtedly has its own distinctive features. First of all, mobile VOD streaming there dominates connected TV and desktop, as assessed by Penthera.

Another local market attribute is the lack of high-quality cellular coverage in the region. Coupled with little patience for buffering, this translates into high stream abandonment rates. In fact, for over 40% of users, only 2 buffers were enough to drop their stream. Consequently, video download functionality came into play and became a must for the majority of users with 70% of them willing to pay extra for it.

Finally, LatAm has specific content peculiarities. Besides trendy shows watched all over the world, Latin Americans adore telenovelas (a special kind of soap opera, recognizable with fast-paced, concise melodrama) and sports (mainly football). This is definitely something worth noting for content owners aiming to capitalize on the market's growth.

There's always room for ads

Most Internet users tolerate ads when they get free content in exchange. The video-on-demand field in LatAm is no exception – the ad-supported model spread here indicates its viability. Nonetheless, it slightly lags behind the subscription-based model with more than 87% of OTT viewers using SVOD in comparison to 70% using AVOD, as research from Penthera suggests. The latter is mainly represented by PlutoTV, Roku, and Plex.

Many AVOD providers in Latin America have already unleashed programmatic advertising, an automatic ad auction system that simplifies targeting, performance measurement, and ad curation. Its growth in the region is in line with the global trend set out by IAB, with Brazil leading programmatic video ad spending.

Ad delivery in LatAm faces the classic issues of repetition as well as significant problems with ad relevance. This highlights the lack of targeting capabilities and other features that help tailor ads, which ultimately leads to advertisers wasting their budgets.

Having said that, many companies in LatAm, according to IAB, are willing to move programmatic media buying processes in-house or adopt a hybrid approach rather than delegate these operations to third-party contractors. This enables advertisers to increase cost-efficiency, overall campaign effectiveness, and improve returns on investment results.

What does the future hold?

Some media players have already realized the LatAm OTT's market potential and made sure they could reach more eyeballs as well as streamline ad monetization via the new medium.

It is expected that regional content providers will be fiercely challenged by international rivals, including Hulu planning to roll out in LatAm this year. Locally produced content, which used to be the key advantage of native media sellers, is now also covered by global streaming services. This leaves regional players with fewer cards up their sleeves.

Related: 25 early-stage startups that are digitizing Latin America

Nevertheless, as the market is far from saturation, there's space for everyone to cash in. This is supported by Ampere Analysis's prediction that Claro Video, Blim TV, and Movistar Play will almost double their viewership by 2025.

Another opportunity comes from monetization models. Since the price is often the main concern for viewers holding their purse strings in Latin America, free ad-supported platforms can get their foothold among price-concerned users. Thus, by adding popular content types like telenovelas and sports shows, OTT providers can secure front-runner positions in the space.

It's highly likely that media owners will be looking for novel ways to fit in and get a sizable chunk of the market, which in turn will create even more ad spots. Therefore, those advertisers who don't have their heads in the sand know the time is right to jump in early and build equity with their audiences.

Daniel Elad

Ad Tech Advisor, Entrepreneur

Daniel Elad is the chief strategy officer at TheViewPoint, a SaaS ad-monetization platform for CTV publishers. Elad is passionate about ad-tech innovations and creative transformations. He is dedicated to bringing СTV publishers more control over their ad inventory.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Business News

'Wildly Inappropriate': Woman Says She Was Denied a Job Because She Didn't Wear Makeup During the Interview

Melissa Weaver was applying for a VP of HR job at a tech company via video.

Business News

Uber Is Fixing One of the Biggest Complaints Families and Parents Have With the Company

Uber Car Seat is now available in New York and Los Angeles.

Business News

Founders of Companies Worth Over a Billion Dollars Have These Simple Things in Common

A new study found three traits that stood out in unicorn founders.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

Dollar Tree Is Raising Its Price Cap to $7: 'The Macro Environment Has Gotten in Our Way'

The discount chain's cap was most recently raised to $5 last June.