LatAm Pay-TV Channel Execs On Disruption, Originals

A+E Networks’ Eduardo Ruiz, NBCUniversal’s Klaudia Bermudez-Key and HBO’s Francisco Smith weighed in on the challenges and opportunities in Latin America’s pay-TV sector in a NATPE panel moderated by World Screen’s Anna Carugati.

The session was part of NATPE’s second-annual Latin American Summit, which also included panels on millennials and regional programming trends.

Ruiz, president and general manager of A+E Networks Latin America, oversees a portfolio of four brands: A&E, HISTORY, Lifetime and H2. Bermudez-Key is senior VP and general manager of NBCUniversal International Networks LatAm, which encompasses E! Entertainment, Syfy, Telemundo Internacional, Universal Channel and Studio Universal. Both companies have distribution partnerships with HBO Latin America. Francisco Smith is the president of distribution and media at HBO Latin America, which operates its own branded premium services and distributes a bouquet of basic-cable networks.

Carugati kicked off the session by asking the panelists about what cable platforms are looking for today.

Smith noted that economic difficulties in some markets slowed down the development of traditional pay TV, while broadband accelerated. “You probably have about 50-percent penetration of pay TV [among] TV households. In the last ten years, broadband homes have grown faster than pay-TV homes.”

Cable platforms have responded, though, “investing in and reinventing their businesses and taking advantage of technology,” Smith continued. “[Operators] are giving added value to their subscribers by creating OTT platforms, digital platforms, that complement the linear channel subscription. They also want to offer something to the broadband subscriber who never had pay TV.”

As such, the key element for operators is flexibility. Platforms want “quality” content, regardless of genre, Bermudez-Key added, as well as portability.

“Latin America is still in growth mode in all types of distribution,” said Ruiz. “Pay television penetration continues to grow, even with all the new OTTs and the new technology.” Ruiz forecasts continued growth for the next three to five years in ad sales, distribution and affiliate revenues and content production.

“The eyeballs are still there,” Bermudez-Key agreed, “and people are watching more per day. Unfortunately, we’re not able to [measure] 100 percent of the viewing.”

On the state of tracking viewer metrics, Bermudez-Key said, “major investments have to be made and the media groups have to be willing to put the money behind that type of research and data and equipment. We’re nowhere close to the measurements reported in the U.S.”

Ruiz later noted that there’s an increased focus on “how to provide better data points to our advertisers so they feel that the investment they’re making in our brands provides some ROI.”

The conversation moved on to how pay TV is being impacted by economic challenges in several markets.

“There are a lot of options for consumers,” Smith noted. “They don’t have to buy the whole package of 100 channels.” Moreover, pay TV in the region is priced much lower than it is in the U.S., with packages of 80 channels for less than $10. “For any other platform to compete with that is very hard,” he said.

Ruiz noted that many of A+E Networks’ affiliate partners provide internet services and can offer more attractive bundled packages.

On the impact of Netflix, Ruiz noted, “It’s been a disruptor in several different ways. One is [making us] think differently about what we produce. I view Netflix as just another network. They’re making us produce at a better quality—we welcome the competition on the content-production side. They forced us to think about the user experience. The windowing has also become interesting.”

Bermudez-Key agreed, stating, “They have raised the bar in content production. It makes our job of choosing content a lot more focused and strategic, and even [makes us] look at the option of producing.” She also pointed to rising content costs as an impact of Netflix’s ascendance. “That has become a challenge for the media groups. We’re having to compete not only for the windowing but also for the pricing on the content out there. Also the scheduling strategy. Can we continue to schedule things the same way that we used to ten years ago? Should we premiere four episodes back to back so people can binge?”

Carugati then shifted the conversation to original production in the region. “Original production for HBO is the key,” Smith said. “It’s been our benchmark and differentiation in the premium environment.” HBO LatAm has been producing in the region for more than a decade, creating 20-plus series totaling some 400 hours. With that volume, the company has launched its own content syndication arm.

At NBCUniversal, the originals strategy has focused on lifestyle and reality, Bermudez-Key said, largely for E! “We are doing about 140 hours a year between Spanish LatAm and Brazil. We produce formats that have been successful around the world and most of them are our own NBC formats, and we’ve produced some original shows. It’s been quite successful. Part of what we’ve been doing at NATPE is looking for new formats.”

A+E Networks has been engaged in originals for some 15 years, Ruiz said. “We’re doing docudramas on HISTORY. We created Gigantes do Brasil and Gigantes de México. We do non-scripted as well. We are slightly changing the focus now from many long-form hours to more short-form, mid-form.”

Ruiz continued, “We’re focusing on our brands, making sure that they are well-recognized, that people understand what they stand for, what the DNA is.”

Smith said it’s important that “brand awareness be linked to the shows you produce.”

On the impact of cable on free TV in the region, Bermudez-Key said, “With the rise in the quality of series being brought to pay TV, [terrestrials] have switched how they look at American series; they are out there competing for those rights and in some cases want the first window.”

Ruiz added that there are now more creative production models that see terrestrials co-producing with pay outlets.

With major elections taking place in Brazil, Colombia and Mexico this year, Carugati asked the panelists if they were anticipating any regulatory changes. Bermudez-Key said her group is keeping on eye on Argentina, where local content mandates may be on the horizon, similar to the ones in Brazil. “We’re ready to tackle it if it were to happen.”