Exclusive Interview: Globosat’s Alberto Pecegueiro

July 2, 2012 World Screen Top Stories
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PREMIUM: With a booming middle class in Brazil, the subscription-television market is growing rapidly, but capacity on cable and DTH platforms had become almost impossible to come by, Alberto Pecegueiro, the CEO of Globosat, the country’s dominant pay-TV channel operator, tells World Screen Newsflash in this exclusive interview.

 

WS: How have the gains in the Brazilian economy affected Globosat’s businesses?
PECEGUEIRO: It’s not specifically about Globosat’s businesses—it’s about the pay-TV industry as a whole. Pay TV has consistently been one of the top two fastest-growing media segments in Brazil, sometimes following broadcast, sometimes following the Internet. We’ve been collectively gaining market share in the last ten years. We have been fueled by the growth of the subscriber base. In the last seven or eight years, the subscriber base has tripled. [That] ends up guaranteeing growth in our share of the overall advertising pie.
 
WS: In a previous interview with us, you mentioned that an increasing number of your customers hailed from the middle class. How is this changing the way you do business in Brazil?
PECEGUEIRO: We don’t want to go head to head against the free-TV broadcasters. They have a long history and expertise with the broader public, we have a great attachment to the upper-scale market. Globosat is probably the heaviest buyer of media research in Brazil and we have an intensive use of research in our operations, which means we are very closely following the development of these new groups in the market. But I don’t think it’s a wise thing to go after them [as our primary audience.] We owe a lot to the A and B classes, the cable operators count on us to satisfy the demand of those classes and so do the advertisers. We are moving cautiously in terms of identifying the impact of the demands of these emerging classes on the pay-TV market, and we’ll take that into account. That’s shouldn’t be our main priority.
 
WS: You launched three new channels recently: SportTV 3, OFF and Gloob. How have they progressed? What ideal market conditions should there be in order to launch new channels?
PECEGUEIRO: I think that the last part of your question is becoming fiction because in the current market scenario in Brazil, there’s no space for new channels. Most of the DTH and cable operators have [filled] all of their frequencies—there’s not much if any space left for the launch of new channels. If there is some investment in the cable networks or if the DTH operators contract new satellite capacity in two or three years, we’ll be able to talk about [new channels]. In the foreseeable scenario, there is no space for new channels.
We were lucky enough to have [secured capacity] two or three years ago, so we’re just fulfilling slots that we had already guaranteed. SporTV 3 is still not carried by Sky in Brazil, which is lagging behind in terms of capacity—other than Sky it has [extensive] carriage. The other channel, OFF, is 100-percent covered in terms of carriers. It is a very niche channel that is dedicated to extreme sports and lifestyle, of course in HD. And the last one of the three is a kids’ channel called Gloob. It’s our first foray into the kids’ market. We know that the [kids’] brands in the Brazilian market are heavyweight players, companies that have developed great knowledge of the market. We believe that we can carve out some space in that marketplace with Brazilian content. We are targeting the 5-to-9 age group. We are going to be researching this market, measuring the impact in response to the programs and adjusting the programming grid progressively. In two or three years we hope to be among the top channels in that category.
 
WS: How is the rollout of HD channels progressing?
PECEGUEIRO: We still consider it as an emerging product. As an example of that, it’s been almost five years since the launch of our first HD channel and, so far, not a single advertiser has come to us looking to exhibit HD ads. On the subscribers’ side, the ratings are not regularly measured, so, although we are sure about the success, we don’t have too much data to prove.
 
WS: And what about the prospects for 3D?
PECEGUEIRO: In spite of an initial demand from cable and DTH operators, there has been a setback. As we started to prepare ourselves to fulfill that demand, we noticed that they have cooled down a little bit. We have still been doing events and experimenting with the technology, but at this point in time we have backed off from the idea of launching a dedicated 24-hour channel. We are preparing ourselves to broadcast the London Olympic Games on four SD channels that will be also duplicated into four HD channels, and [we’ll have] a 3D channel for that. We’ll see what the response is and from there we’ll see what the next step should be. At this point in time I don’t think this is a hot item in the agenda of the industry in Brazil.
 
WS: Tell us about your online and on-demand initiatives.
PECEGUEIRO: Globosat has it own new-media department, and that has been expanding at a very fast pace. We have an amazing offer of apps for our channels. We have launched muu.globo.com, which is our online platform for Globosat content. muu and Telecine are working together to launch Telecine Play, which is a video-on-demand platform on the Internet, and the early results for that are very encouraging.
 
We have a TV Everywhere strategy in which we are going to be in an alliance with the cable and DTH operators, through which our subscribers will have direct access to a huge array of content on the Internet on a catch-up basis, or as VOD format for movies. We also are going to have an open platform with library content that will be available as a promotional tool for the subscription business. That’s already in place. We have pure Internet products, we have games and applications available throughout our site and through the mobile platforms. And we also have VOD walled garden content. We launched a product called Philos, which is very sophisticated. We have 500 hours of content that will be made available through the VOD platform.
 
As I mentioned before, there is a scarcity of [capacity] for the launch of linear channels, so the idea of making products available through walled garden VOD slots is something that we are testing. We are about to launch Clapp, which is the same thing for the live-music segment.
 
These are examples of the things we are doing outside of the linear channels. We believe this will help our core business and will also open up new opportunities for growth in the future.
 
WS: What other growth opportunities do you see for Globosat in the next five years?
PECEGUEIRO: We tend to be very careful. We’ve been in Brazil long enough to understand that the economy [goes through] cycles of growth. We are not betting that Brazil will keep that fast pace forever. I think there is a herd behavior in a numbers of companies. The international media companies are targeting Brazil as the last Coca Cola of the desert, but we don’t intend to embark on that euphoria. We understand that Brazil is not an island and that it is somewhat involved in the global economy. If there is a slow down in the global economy, Brazil may have a slow down in its growth rate as well. It is not going to be a surprise for us.