Mexico’s SVOD growth to drive video entertainment revenue beyond $4.4B in 2021

Mexico's SVOD growth

As in other regions, COVID-19 has been a catalyst for Mexico’s SVOD growth in the fast evolving video entertainment market, a new study shows.

Futuresource Consulting posits that digital video will be crucial to the video entertainment market’s recovery in 2H 2020, with 50% growth expected by the end of the year, topping 17 million subscriptions. Futuresource also said churn in the market has been reduced during the pandemic.

By the end of the year, Disney+ is expected to launch (Q4) in Mexico. The increasing number of SVOD services available in the market hasn’t led to saturation or pushback from consumers. In fact, the market has seen an increase in subscription per household from 1.65 in 2019.

Mexico’s SVOD revenues increasing

Revenues from subscription video services are continuing to increase, leveraging the momentum that has built through 2019 and the first half of 2020. Futuresource said revenues from SVOD increased 42% in 2019.

Much of that revenue came from the usual source, Netflix, with major contributions from Claro Video, the launch of Apple TV+ and StarzPlay.

Other smaller general entertainment and niche content services continue to roll out, looking to catch the rising tide in Mexico. There are also other, global services, planning to launch in 2021, including HBO Max and Hulu.

As in the U.S., those services are providing a different lineup of content that increases the availability of premium content without significant overlap.

Online video will renew momentum

While some content companies will see declines in revenues during 2020 due to COVID-19 (theater closures are weighing heavily on the market, pushing revenue down 4% to $3.7 billion in 2020), the market should see overall growth of 17% through 2021, Futuresource said.

SVOD remains strong and transactional video on demand (TVOD) has seen strong growth as well during the lockdown.

Amazon Prime, which launched recently, has seen a big uptake from consumers hungry for new content. Although there won’t be many major releases in the second half of 2020, 2021 already is shaping up to see a better array of content available for rental and purchase.

And it might be sooner. Disney, for example, this week announced that it would be releasing Mulan directly to consumers through Disney+. Last month, Disney+ saw a significant bump in subscriptions when it released Hamilton on the service. It, too, originally was planned to be released in theaters.

Mulan will be offered at a premium price – a whopping $29.99 – to subscribers. It will be released in theaters where Disney+ isn’t yet available.

During the pandemic, Universal Pictures released Troll’s World Tour on several streaming services for $19.99, seeing revenues top $100 million in the OTT play.

Futuresource sees the TVOD market topping $36 million in Mexico, despite limited original content availability, and predicts much bigger growth in 2021.

The bottom line

The appetite for streaming video in Mexico is substantial and COVID-19 has helped to hone it even more.

Preliminary numbers from Brightcove’s Q2 2020 Global Video Index shows consumption of entertainment video more than doubled in the first half of the year, up 106%. Much of that growth came on smartphones, where views increased by 93% in Q2 alone, compared to 48% growth for computers. Views on smartphones made up 60% of all entertainment views during the quarter.

As more OTT services become available, consumers will continue to engage with them… as long as original content continues to flow. There’s nothing likely to increase churn as quickly as content that isn’t refreshed regularly.

SVOD has been a life ring for the video entertainment industry during the first half of 2020. It will continue to fuel growth as it becomes the new normal for viewers.

Futuresource projects an annual growth rate of 8% through 2024, with SVOD accounting for about one-third of the $5.6 billion it projects for 2024, or about $1.85 billion.

That share, in my mind, is likely to be closer to 45% – about $2.5 billion – as younger consumers enter the workforce over the next five years and turn to something they’re more comfortable with than broadcast – streaming.

Stay tuned and stay well.

Jim O’Neill is Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn