Chile's Pay-TV Market Needs Content Packaging and On-Demand Services

Television in Chile is slowly making its way to a larger segment of the population after historically being a service predominantly limited to higher-earning social segments. As the country’s economy improves and the triple play becomes the way to compete in the market, paid (i.e., subscription-based) TV services are becoming a critical part of any operator’s strategy to capture and retain subscribers.

Yankee Group believes that as part of the Anywhere revolution, consumers will want their favorite programming available on any device at any time. To capture this Anywhere ConsumerTM, operators must have a variety of content and prices designed for different tastes, wallets, schedules and locations. Although this vision is still in its infancy when it comes to television in Chile, the first steps are being taken.

Chilean operators have begun creating a more dynamic offer to satisfy consumers’ demand. Chile’s pay-TV market is far more advanced than most other Latin American countries. Yet although the pieces are in place, operators must put greater emphasis on improving the customer experience and educating customers on how to integrate new services into their lifestyle to take the market to the next level.

Interactivity has emerged as a competitive differentiator, with direct-to-home (DTH) and cable operators offering basic interactive guide services over a digital network. Video-on-demand (VoD) has also emerged in the arsenal of two major operators: cable operator VTR and DTH provider Telefónica Chile, the latter via IPTV. However, the scope and range of these services are still lacking. VTR’s VoD doesn’t offer the entire programming schedule and Telefónica only offers its IPTV services in a very select group of neighborhoods in the capital Santiago.

Pay-TV services have been expanding, in some regions reaching 50% household penetration, while coverage lags in other areas (see Exhibit 1).

Furthermore, DIRECTV has taken a play out of the mobile business model and launched a prepaid TV service that enables consumers to better control how they spend on TV.

Yankee Group envisions a market where:

• The top locally produced programs are available free via VoD and are used to draw consumers to other premium content.
• Operators respond quickly and thoroughly to technical issues that arise.
• Operators take a greater role in finding exclusive content for premium channels and offering more scalable à la carte programming to reach lower income segments.