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Brazil's Video Market Picks Up the Pace, Though Threats to Local Content Production Loom

Video Entertainment Market Analysis and Commentary

18 Mar 2020 - Brazil’s video entertainment market has emerged from the shadow of recession, as 2019 ended with consumer spend levelling off after three years of decline. That’s according to a recent industry report from Futuresource Consulting, which cites new SVoD services from global players and increased investment in Pay-TV and OTT services from local media companies as the key drivers of consumer spend. However, investment in local content production is under threat, as Brazil’s government has announced budget cuts of more than 40% to its film agency, Ancine. This has halted work on around 400 film projects and is impacting almost all indie and documentary films in the country. The report was published prior to the COVID-19 outbreak, which brings an added layer of uncertainty to the sector.

“Despite the government’s withdrawal of funding at a grass roots level, there’s a new mood of cautious optimism in the overall video entertainment market,” says David Sidebottom, Principal Analyst at Futuresource Consulting. “The market achieved R$22.3 billion (US$4.9 billion) in 2019, which is a slight uptick from 2018. Meanwhile, an upsurge in SVoD activity is laying the foundations for future growth and almost completely cancelling out the decline in Pay-TV subscription revenues, which are heavily influenced by Brazil’s financial volatility. As the majority of Brazil’s economic improvement kicked in during the second half of 2019, it did little to slow the descent of Pay-TV subscriptions, which fell 7% in 2019, following on from a 9% decline in 2018.”

The combination of a recovering Brazilian economy, an improving digital infrastructure and an increasingly web-savvy consumer base is applying upward pressure to premium digital video markets across both SVoD and transactional digital video. SVoD in particular has entered a new phase of development, with Futuresource figures indicating that total consumer spend on SVoD reached almost R$2 billion in 2018, accelerating up to R$3.1 billion in 2019.

“Moving forward, multiple SVoD uptake will be the norm in Brazil,” says Sidebottom. “Since its Brazilian launch in 2011, Netflix has become commonplace in many urban areas, particularly among those aged 16 to 35. Our market assessments suggest around 90% of Brazilian SVoD households subscribe to Netflix. Launches from Amazon Prime and Apple TV late last year will help drive both subscriptions and consumer spend to new levels rather than erode Netflix’s dominance. Combine this with the Disney+ launch scheduled for Q4 2020 (or perhaps sooner), and the newcomers will be battling it out with established local players Telecine Play and GloboPlay to achieve second position in the marketplace. While Netflix subscription growth will naturally slow and new services will compete for share of wallet, its longstanding content reputation and brand equity ensure it of a robust future.”

In February, ViacomCBS Networks International announced that its Pluto TV, the free, ad-supported streaming service, will launch in Brazil at the end of March, with Pluto TV Brazil expected to launch by the end of the year, offering programming in Spanish and Portuguese. It’s a move that could pose a minor challenge to subscription services in the region. However, localised content such as the Reality Z series from Netflix, set to premiere later this year, will help to fend off low cost and ad-funded aggressors.

Moving forwards, Futuresource expects overall video consumer spend in Brazil to achieve average annual growth of 2%, reaching R$23.9 billion in 2023, although this doesn’t take into account any impact from the COVID-19 outbreak.

Futuresource Consulting’s video insights Brazil market report reviews the overall video entertainment market and assesses the impactors and drivers as the sector evolves. Key areas covered include Electronic sell-through (movie and TV), iVoD (movie), subscription online video (SVoD), Pay-TV VoD, DVD and Blu-ray (sell-through and rental), subscription Pay-TV and box office. For further information on this report, please contact Jack Tammaro via jack.tammaro@futuresource-hq.com

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Here at Futuresource Consulting we deliver specialist research and consulting services, providing market forecasts and intelligence reports. Since the 1980s we have supported a range of industry sectors, which has grown to include: CE, Broadcast, Entertainment Content, EdTech and many more.