Production Incentives for Over The Top Platforms in Latin America

This blog can be attributed to Facundo Recondo, Vice President of International External and Regulatory Affairs, Caribbean, Central and Latin America, AT&T.

The global number of Over the Top (OTT) content platform users is projected to surpass 650 million by 2021, up from a mere 46 million in 2012. Latin America OTT subscriptions forecast to reach 81 million by 2025, almost double the 42 million recorded at end-2019. With almost 150 million new mobile internet subscribers in the region by the end of 2020, up 50% from 2015, condition are growing more favorable for expanding OTT platforms. Now, with many of the conditions for success already in place; working together, industry and government can ensure that content producers and providers have the opportunity to grow and thrive in Latin America, benefiting consumers.

One of the key factors in the development and growth of platforms in Latin America is, and will be, the variety of original content. Along with price and functionality, this is one of the most important factors for streaming services in the region. Experience in other regions has shown that locally produced content is a determining factor in the competition of platforms in different markets. In particular, the Spanish-language market is huge and increasingly receptive to other countries. In fact, according to Netflix, 90% of people who have seen their Spanish-language series “Money Heist” and “Cable Girls” have done so outside Spain.

WarnerMedia has been at the forefront of this investment for over a decade. Furthermore, this year, WarnerMedia announced that Latin America would be HBO Max’s first international market after its U.S. launch, emphasizing the value that we places on the region.

The region must take full advantage of this demand and desire for local content and stimulate the development of the local audiovisual production market. The most efficient way to do this is to implement incentives to allow local and international platforms to develop, compete, and grow. These include policies such as tax credits and cash rebates. Competition among existing platforms today is intense and benefits consumers. Production incentives are critical. Further, government must also look to enforce content protection regulation, and to invest in education, training and infrastructure to support the industry. With smart policies in place regionally, Latin America will be a desirable market for those content platforms with a thirst for success.

As with any great opportunity, there is the danger of stifling growth with bad policy, such as, “catalog quotas.”  A catalog quota applied to OTT platforms could result in a reduction in content that contains a cultural value, creating a loss of diversity, erosion of quality, an increase in production costs, and even a reduction in the quantity of local productions. Quotas inevitably lead to a distortion that alters the functioning of the audiovisual market and ultimately has the potential to negatively impact consumers in Latin America.

Platforms must be afforded the opportunity to enter regional markets and attract users in a genuine way – leveraging their business models and value proposals. To promote the success of local industry, leaders must favor policies that are incentives, rather than obligations. Simply put, quotas can discourage investment, and negatively affect the quality and choice that modern consumers expect. Now is the time to be thoughtful with our actions, to ensure we do not stifle the OTT market before it has really begun!

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