Digital TV homes to triple in Latin America

Most Latin American territories are experiencing a surge in digital television penetration, according to a new report from Digital TV Research. Digital TV Latin America calculated that less than a quarter of TV households received digital signals by end-2010, though this was up from only 16.5% a year earlier. By 2016, the report forecasts that 71% of the region’s TV households will have digital TV – or 93 million (triple the end-2010 total).

Latin America TV households by platform (mil.)

                     2010  2011  2012  2013  2014  2015  2016
                    ----- ----- ----- ----- ----- ----- -----
Digital cable subs    6.2   7.8   9.8  11.9  14.2  16.5  18.8
Analog cable subs    16.8  15.8  14.4  13.0  11.7  10.4   9.2
Pay IPTV subs         0.4   0.6   1.3   2.5   3.5   4.6   5.5
Pay DTH              13.1  16.8  19.3  21.4  23.1  24.6  25.8
Digital free DTH      1.3   1.3   1.4   1.4   1.4   1.4   1.4
Analog terrestrial   73.9  67.1  59.8  52.0  44.1  36.5  28.9
Primary FTA DTT       8.4  12.5  17.6  23.3  29.2  35.1  41.1
Primary pay DTT       0.0   0.0   0.0   0.1   0.2   0.3   0.4
                    ----- ----- ----- ----- ----- ----- -----
Total               120.1 121.9 123.7 125.5 127.3 129.2 131.1

Source: Digital TV Research Ltd

Report author Simon Murray said: “Many Latin American economies (notably Brazil) are booming, which results in a growing middle class. Between 2010 and 2016, 11 million more TV households will be added in the region. One notable exception is Venezuela, where the government has introduced restrictions on foreign currency transfers, which has led to overseas investment stagnation in the TV sector.”

“After years of over-regulation, governments are liberalizing the pay TV sector. This has led to lower prices and greater consumer choice, not only for TV channels but also with bundles. It has also paved the way for greater foreign investment. Three multinational groups (Claro/América Móvil/Telmex, DIRECTV/Sky, and Telefónica) have established operations in many territories.”

Despite the rapid conversion, digital TV will still have plenty of room for growth for some time to come. There will still be 38 million analog TV homes (29% of the total) by end-2016, though this is down 64 million on the 102 million in 2006. More than half the TV households in Peru and Venezuela will still be analog by 2016. Brazil will grow from 13.4 million digital homes at end-2010 to 45.3 million by end-2016, though 17.7 million will still be analog.

Of the 64 million digital homes to be added between 2010 and 2016, 33 million will come from DTT. Cable and pay DTH will add 13 million each, with pay IPTV supplying a further 5 million.

So pay TV penetration will rise, but not as dramatically as digital TV penetration. Pay TV penetration will reach 46% by 2016, up from 30% at end- 2010. However, this does mean 23 million more pay TV homes. Argentina will record 77% pay TV penetration by 2016, but Brazil will be at the other end of the scale at 33%.

Latin America pay TV revenues by platform (US$ million)

                    2006    2011    2016
                  ------  ------  ------
Digital cable TV     397   1,847   3,804
Analog cable TV    3,245   3,369   1,908
IPTV                   0      73     751
DTH                2,181   7,007  11,014
DTT                    0       0      38
                  ------  ------  ------
Total              5,823  12,296  17,514

Source: Digital TV Research Ltd

Pay TV revenues in Latin America will be US$7 billion higher in 2016 (US$17.3 billion) than in 2010. No prizes for guessing that Brazil (US$6.9 billion) will be the top contributor, followed by Mexico (US$4.0 billion) and Argentina (US$2.6 billion).

DTH will remain the main source of pay TV revenues; more than doubling to US$11 billion by 2016. The number of pay DTH homes will climb by a similar proportion to 26 million. Brazil will be the largest country by DTH subscribers, but penetration will be highest in Mexico (32%) followed by Chile (26%).

The number of homes paying for IPTV will take off from a very low based to reach 5.5 million by 2016 – or 4.2% of TV households. IPTV penetration will be highest in Chile and Colombia by 2016, at 6% each. IPTV revenues will reach US$752 million by 2016, up from only US$45 million in 2010.

Murray said: “Cable TV is not going to add much traction. This is mainly because analog subs will not necessarily upgrade to digital cable, but may defect to other digital platforms – including DTT.”

There will be 28 million cable homes by 2016, up from 23 million at end-2010. However, cable penetration will be 21% by 2016, from 19% at end-2010.

The good news for cable operators is that the number of digital subs will triple over the same period, although the analog total will halve. Digital cable penetration will be highest in Argentina by 2016, when a third of homes will subscribe. Another 23% of Argentine TV households will still receive analog cable signals by 2016.

Cable TV revenues will increase by only 13% between 2010 and 2016 to US$5.7 billion. Digital cable TV revenues will climb by US$2.3 billion during this period to US$3.8 billion, with analog cable TV falling from US$3.5 billion to US$1.9 billion.

Most Latin American countries are slowly rolling out the ISDB-T standard for DTT, usually with the support of the Japanese government. However, the speed of conversion is about to accelerate, from 8.4 million homes (7.0%) at end-2010 to 41.1 million (31.3%) by 2016. Brazil will provide 26.8 million of the 2016 total.

Analog terrestrial signals will still be received in 22% of TV households (29 million) by 2016, though this is well down on the 62% (74 million) recorded at end-2010. Peru will still have more than half its TV households taking ATT signals by 2016.