Growth in middle-class powers biz

RIO DE JANEIRO — A fast-growing middle-class, drawn to new series such as GNT’s “Dilemas de Irene” and vintage fare such as Viva’s “Quinto dos Infernos,” is driving up the pay TV industry in Brazil.

For the past five years, subscribers to networks like GNT, which airs on pay TV platforms Net Servicos and Sky Brazil, and Viva, on Sky Brazil, have been signing on to feevees at an annual average of 19%

It’s a takeup rate that had reps of the nation’s pay TV industry in a celebratory mood at their annual meet and mart, ABTA 2011, in Sao Paulo last week.

Brazil now has the largest number of subscribers among Latin American countries, with 11.1 million customers in July, forging ahead of regional pay TV leader Mexico, which had 10.7 million subs in the first half of the year.

ABTA’s executive prexy Alexandre Annenberg predicts the total number of subscribers will reach 12.5 million by the end of the year — good news for the country’s leading pay TV operators Net Servicos and Sky Brazil, owned by DirecTV and media conglom Globo.

Brazil’s pay TV sector had a late start in the mid-1990s, and the industry initially failed to expand as quickly as expected, as most locals couldn’t afford the service and stuck with free-to-air terrestrial TV.

But with channel packages ranging from $31.60 to $190, many more viewers can find an attractive price point.

And there’s potential for even more growth; pay TV penetration in Brazil, a country with 38.8 million TV-owning homes, is just 28.7% — lower than many countries in the region.

“The price barrier has always been the major obstacle for pay TV,” says Annenberg. “For so many years, just 5% to 10% of our subscribers were part of the middle-class, all the others were part of the upper classes. Now the middle class represents 33% of subscribers, up from 27% last year.”

Annenberg says the sector’s combined revenue, which includes triple-play services (TV, broadband and telephony) will reach 14.5 billion reals ($9.3 billion) this year, twice as much as five years ago.

The rapid expansion is expected to continue, according to Rubens Glasberg, prexy of Converge, the company that organizes the ABTA confab.

Aside from middle-class growth, he adds, the sector will profit from an increase in competition once a new regulation is passed lifting the restriction on investments by foreign groups and telcos in cable in Brazil. This will allow large players — Spain’s Telefonica, Mexico’s Telmex and Vivendi from France — to compete in that country. Currently foreign groups can control satellite operators, but not cablers.

The sector expansion had a positive effect on ABTA 2011, which ran Aug. 9-11; the number of exhibitors at the event rose to 200, up 30% over 2010, pushed by the increasing participation of Asian equipment and service providers, Glasberg says.

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