Over-the-Top (OTT) services offer content, either free or at very low cost, over a broadband connection. Services such as Netflix (paid) and Cuevana (free) are increasing users among those who consider “on demand” the most distinctive feature of content. While cord cutting is one risk for pay-TV providers, the most acute problem could be the progressive emergence of a new demographic segment that has never paid for TV content.
In the Latin American region, pay-TV consumers are gradually making their way into the “anywhere, anytime, from any device” trend by either migrating to a more basic pay-TV plan and mixing that with an OTT subscription, or by canceling their pay TV altogether.
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According to Frost & Sullivan research, the OTT video services market in Latin America achieved $96 million revenues in 2013 and is estimated to reach $783 million in 2018.
In an attempt to fight back, pay TV companies are including value-added services such as Video on Demand (VoD) in their portfolio. However, the growing OTT market represents both a threat and an opportunity for telecommunications operators globally. An OTT partnership could help to ensure improved customer retention and competitive advantage for pay-TV operators.
A great example of a partnership between a pay TV and an OTT player is the relationship between Comcast Corporation and Netflix in the United States, where Netflix is paying Comcast for wider bandwidth to ensure faster content delivery. VS
Maiara Munhoz is a digital transformation industry analyst at Frost & Sullivan in Latin America.
