Joel Pacheco Gonçalves
For those who don’t know, in Mexico, there are at least seven different options of subscription (SVOD) and transactional (TVOD) video on demand services. International options include Netflix, Amazon Video, and HBO GO; whereas local providers are Claro Video, Blim, xView, and most recently Axtel Play.
Every major carrier in the country has its video on demand offering hoping to capitalize on their existing user base to boost growth and grab a piece of Netflix’s cake.
According to the latest National Study of Multimedia Content Consumption from the Federal Institute of Communication (IFT) in Mexico, 36% of consumers surveyed said to have Over-The-Top services contracted, and 70% of them reported having Netflix, followed by Claro Video and Blim with 35% and 3% respectively.
Interesting fact – In Netflix most recent earnings report (Q2 2017) the only competitor mentioned from Mexico is Blim.
Don’t miss: What the Blim & Telefonica deal means for Netflix and other content providers
Netflix seems to be leading the OTT VOD market in the country by far; however, if we take a look at the overall video consumption over Internet in Mexico, YouTube’s overwhelming 92% over Netflix’s modest 20% tells another story.
Because the OTT VOD market in Mexico has much more room to grow
Mexico is the second largest online video content distribution market in Latin America, only behind Brazil – of course. In 2016 alone, the subscription and transactional video on demand services grew an estimated 39%, according to a recent report published in IHS Technology’s Media & Technology Digest.
Take a look at this analysis: The telco industry in Mexico four years after the reform
Competition between these international and local players keeps the momentum going driving the market growth to an estimated CAGR of 15.6% in revenue from 2016 to 2021, only considering the subscription VOD segment.
The promising numbers above are characteristic of a booming market and explains the interest of local carriers to participate with their video on demand platforms and business models. There is still plenty of room for everybody.
Will Netflix be able to maintain its crown in Mexico’s VOD market?
As of today, the value proposition that has been most successful in attracting subscribers for domestic players involves in-house production and Spanish-language content. As a matter of fact, in October 2016, Televisa withdrew its content – mostly soap operas and movies – from the Netflix catalog to make it unique for Blim, its own streaming service.
It is a real possibility that Netflix’s market share in Mexico might get a hit shortly due to the entry of national players offering content and services tailored to local interests.
What does this mean for international carriers like you?
The short answer: expect even more demand for capacity coming from Mexico.
Undoubtedly, the fact that the VOD market in the country is soaring has a direct consequence in data traffic for domestic internet providers. Mexico’s local carriers must be able to keep up with demand and find ways to increase their quality of service by growing its network infrastructure and purchasing more Internet capacity.
Public peering with major content providers will also become fundamental to localize the traffic and reduce network latency that would impact customer’s service satisfaction.
If you are already in McAllen, Laredo, or El Paso with MDC, prepare ahead. Be sure that your equipment on site can manage this future demand; our engineers would be happy to help.
In case you are not connected in any of our border locations yet, we may have an offer you can’t refuse. Get in touch, you don’t want to miss this growth opportunity.
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