The Pay-TV Innovation Forum Reveals Key Findings for the Latin American Pay-TV Market

83 percent of Latin American executives surveyed believe that the shift to OTT will have a positive impact on their businesses over the next five years compared to 70 percent globally

93 percent predict moderate to strong growth in new sports streaming services in their markets over the next five years

The majority (90 percent) believe that pay-TV service providers will have to innovate their product pricing and packaging to retain and attract new customers

Cheseaux, Switzerland and Phoenix, Ariz. - August 22, 2019 - NAGRA, a Kudelski Group (SIX:KUD.S) company and the world's leading independent provider of content protection and multiscreen television solutions, in partnership with MTM, a leading international research and strategy consultancy, today released the key findings of the Latin American edition of the 2019 Pay-TV Innovation Forum. The report features insights collected from senior executives representing leading pay-TV providers, broadcasters, OTT services and rights holders, and reveals particular nuances for the Latin American pay-TV market.

The new research explores the key trends and developments affecting the region, as well as the challenges and opportunities in super-aggregation', sports OTT services, product pricing and packaging, and content piracy. Key findings reveal that:

While global pay-TV executive sentiment about the impact of OTT services is mixed, Latin American executives are optimistic, seeing new super-aggregation' opportunities

Latin American pay-TV executives are more optimistic than their global peers about the impact of OTT services on the pay-TV industry: 83 percent of participants surveyed believe that the shift to OTT delivery will have a positive impact on their business compared to 70 percent of executives globally. Although linear TV is expected to remain an important component of pay-TV offerings due to the lower levels of broadband connectivity in the region, Latin American executives see many new opportunities for super-aggregation' models to offer a range of content and services via a single subscription: 74 percent of pay-TV executives in Latin America agree that super-aggregator' pay-TV platforms will emerge over the next five years, attracting a significant proportion of customers that pay for video content.

Pay-TV executives in Latin America are more optimistic than global peers about the growth prospects for sports OTT services

An overwhelming majority of executives surveyed believe that sports OTT services would be valuable additions to pay-TV bundles. While no paid-for standalone sports OTT services have reached significant scale in the region to date, Latin American pay-TV executives were the most positive about the rise of new sports streaming services going forward, with 93 percent predicting moderate to strong growth over the next five years compared to 85 percent globally.

However, in line with findings from other regions, the cost of sports rights, technology reliability and limited broadband infrastructure are viewed as important challenges in launching sports OTT services.

To ensure they stay relevant, pay-TV providers in Latin America will have to develop a wider range of pricing and packaging options

A majority of executives (90 percent) believe that innovating on pricing and packaging will be necessary to retain and attract new customers in this rapidly evolving landscape. While super-aggregator offerings are perceived to be the most attractive way of re-structuring pay-TV bundles, other innovations around pricing and packaging, such as personalized packages and content-device telecoms bundles, are also seen as opportunities. They also note the challenges OTT can bring such as managing growing complexity and unpredictability of potentially higher subscriber churn, aspects that require new skills, capabilities and tools.

Additionally, 81 percent of Latin American executives believe that a significant proportion of pay-TV subscribers will be accessing their services on Android TV-powered devices - this development is expected to play an important role in future distribution strategies in the region, particularly as pay-TV operators become less reliant on proprietary set-top boxes and extend their services to a wide range of third-party devices.

Content piracy considered a significant challenge in Latin America - addressing it will require deeper collaboration across the pay-TV industry

Pay-TV executives remain concerned about the threat of content piracy stating that it remains a considerable challenge to their business, in line with feedback from global peers: 67 percent of executives in Latin America consider piracy to be a major challenge' or a challenge' to their businesses compared to 60 percent of executives globally. Many (62 percent) feel that the situation has not improved and is getting worse, threatening the value of their pay-TV service. As pirates continue to innovate, the pay-TV industry will require deeper collaboration between all stakeholders and a multi-pronged approach that combines monitoring, legal and technological capabilities to tackle piracy effectively.

It is exciting to see the optimism expressed by Latin American pay-TV service providers as OTT continues to grow and make its mark on the region, said Simon Trudelle, Senior Director, Product Marketing at NAGRA. While challenges remain, they are eager to leverage all that OTT has to offer and with the right technology and support, they can be fast on their way to driving innovative, personalized and secure services for consumers.

Pay-TV in Latin America experienced a challenging period during the 2010s, with intense competition, at a regional and national level, piracy concerns, and economic challenges in many parts of the region; however, operators in the region seem to be looking forward to

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