Signs of slow growth on SVOD platforms

In Mexico, 6 out of 10 Internet users, or approximately 56 million Mexicans, have contracted some OTT or SVOD platform. The increase in the offer of this type of platform has expanded dramatically in recent years and the variety, diversity and type of content that the different brands offer are really attractive. It is possible that due to the imminent recession, the rise in prices in practically all services and the saturation of the market, this upward trend will begin to show more conservative and even disappointing figures for investors.

According to a recent CIU study, the hiring of these services has already seen a notable decline in Mexico. According to the Radamés Camargo publication, the 4th quarter of 2020 saw an annual growth in the number of hires of 18.2%, compared to 8.4% in the first half of 2022.

Although these numbers show signs of maturity in the market, they could hardly be classified as worrying, since SVOD platforms are here to stay and both the growing supply and the recession will force them to be more competitive and specialized in terms of their content library. Of course, a global trend, and one that has not been the exception in our country, has been the change in business strategy to include advertiser sponsorships in the formula.

Netflix, which has 61% of subscriptions, is already announcing the launch of a new “basic with ads” plan at a reduced price ($99 pesos per month), lower resolution content and a limited catalog.

According to the same study, Disney+ (12.8% of SVOD subscriptions), HBO Max (10.3%) and Amazon Prime Video (7.6%) continue to register growth in users, growing 0.2, 1 and 0.5 pp respectively. Conservative figures but finally on the rise compared to the negative trend that Netflix has experienced.

A competitor that has also grown to a 2.1% market share is Star+. This platform has bundled its subscription with Disney+ and Lionsgate+ as well as offered price offers through alliances with digital and telecommunications operators.

It should be noted that the national brands Claro Video and Blim TV register a market share of 2.8% and 1.6%, respectively, and have not been able to secure a more attractive market share.

The growing incursion of free access alternatives with advertising, as well as the possibility of watching live sporting events, consolidated platforms such as Netflix have lost market share and face significant barriers to expanding their preference. CIU estimates that during the following months, the market will continue to experience a significant reconfiguration based on rates and offers.

We are also likely to see increased investment in original content creation and branding in order to differentiate across platforms.