Latin America is a vibrant sports broadcasting market. The spotlight will be on the region even more during the next four years as Brazil gets set to host both the soccer World Cup and the Olympics. For a broadcaster like ESPN, it is a great time to be in the market. German Hartenstein, managing director for ESPN Brazil, talks about how the broadcaster is taking what it has learned from North America and applying it to the Brazilian market.
VIA SATELLITE: The DTH market in Brazil has seen some new players entering the field. What does this up and coming DTH market mean for a broadcaster like ESPN?
Hartenstein: DTH is growing really fast in Brazil — much faster than cable. Last year, DTH became more than 50 percent of the total base of subscribers, and I believe this trend will continue. I think this gap between DTH and cable will continue to increase, mostly because Brazil is a very big country. The cost to build cable around a country that is about 8.5 million square kilometers is really huge. It is very difficult to penetrate in the North and North East parts of Brazil. With DTH technology, it is very easy to get everywhere. Satellite technology has a big advantage and companies like DirecTV and Telmex have been trying to take advantage of that. Most of the companies entering the pay-TV market are using DTH and not cable.
VIA SATELLITE: How big can the DTH market become in Brazil?
Hartenstein: I believe today the satellite market is around 52 percent of the total subscriber base. I think this will number go up. The total number of pay-TV subscribers is expected to double in the next three years in Brazil. I believe DTH will get the majority of these new subscribers. New players are also expected to come to the DTH market.
VIA SATELLITE: What makes Brazil an exciting market for a broadcaster like ESPN right now?
Hartenstein: Brazil is growing very fast. Despite all the growth we are seeing, the market still has only 20 percent market penetration. So, there is still a lot of room to grow. When we look at this potential, we get excited about what the future holds for our business here. Another interesting aspect about this market, and something that is relevant to ESPN, is the passion people have for sports. Brazilians love sports, especially football. The fact that Brazil will host the World Cup in 2014 makes the market more and more interesting.
VIA SATELLITE: What are your plans in terms of producing more content in HD? What is the demand like for HD services?
Hartenstein: In Brazil, we have two SD channels and one HD channel, and the content on the HD channel is different than the content on the SD channels. We are also getting ready to launch a stream of one of our SD channels with an HD version. We will have two HD channels and two SD channels soon. We are seeing some very interesting dynamics here — an emergence of a new middle class with disposable incomes. They have bigger TV sets and they want HD content. The HD base is growing really strong. I would say that 20 percent of the total subscribers in the country are HD. What is important is that it is growing very fast. Once you start watching HD, it is hard to go back to SD.