With football as its main attraction, live sports broadcasting in Latin America is one of the most important content types for pay-TV. While providers carry key championships such as Liga MX, Brasileirao, and the Superliga Argentina, sports are relatively secure within the pay-TV ecosystem. Pay-TV providers have a higher ARPU in comparison with OTT services so they can afford high-cost transmission rights. Lately, however, streaming platforms are starting to invest in sports content and compete with pay-TV for sports rights.
Live sports streaming still in its infancy
Some SVOD services have integrated sports as an add-on in the past, such as Prime Video channels. However, a significant change has been their integration at no additional cost to the subscriber. One example has been Disney’s Star+ in Latin America, launched in August 2021, where ESPN programming, among other professional sports leagues and non-sport content such as The Simpsons and BIOS docuseries, is available for an average of $8.80 per month. At the time of writing, the service has seen a slow take-off, but it is expected to reach around 2.7 million subscriptions by 2025, plus 3.2 million for Combo+ (a Disney+ and Star+ bundle) versus 12.3 million for its sibling service Disney+, launched in November 2020.
With services such as Star+ and other existing players such as DAZN offering live sports directly to consumers, the pressure on pay-TV’s dominant position is forming. One strategy to mitigate these risks is to form partnerships with OTT video players.
Partnerships can battle the loss of sports exclusivity
Pay-TV operators have already formed different kinds of partnerships with OTT providers such as Netflix, Prime Video, HBO Max, Disney+, and, more recently in Latin America, Star+. These partnerships range from add-ons of OTT services in the pay-TV provider’s user interface (STB or streaming box/stick) to less-popular super-bundles within which multiple OTT services are included in the pay-TV plan at a discounted price. Globally, around 40% of partnerships are formed by add-on plans with super-bundles growing more slowly.
Thus, a partnership can be a win-win proposition with pay-TV providers still holding a reasonable portion of rights. By bundling OTT video services that contain sports content, it further contributes to retaining existing subscribers and simultaneously increase reach for OTT players. However, a negative outcome for pay-TV providers is also an increasing possibility as users potentially decide to only stick with a specific OTT service if it fulfils their needs.
What Disney has done with Star+ is certainly a cornerstone for what the future of OTTs can be like. However, the main issue in Latin America remains whether enough members of the public can afford multiple services at a time when budget constraints are an issue across the region.
This article was taken from the Omdia Analyst Opinion piece named ‘Latin America: Traditional pay TV threatened by loss of live-sports exclusivity to streamers’, available here.