All Eyes on Digital in Mexico’s Video Entertainment Sector

Video Entertainment Market Insights and Commentary

As the second half of 2020 gets underway, Mexico’s video entertainment market is expected to recover from the impact of COVID-19, with digital video leading the charge and showing strong prospects for growth in 2021. That’s according to a new report from Futuresource Consulting, which points to 17% growth next year, propelling overall video spend to nearly 100 billion pesos (US$4.4 billion).

“Consumers in Mexico have a big appetite for content, and the growing availability of OTT services is driving the market forward,” says Joanna Wright, Senior Market Analyst at Futuresource Consulting. “Despite a significant uplift for SVOD and transactional video during lockdown, the cinema closures to date and this knock on effect in the second half of 2020 will weigh down the market this year, with overall video revenues down 4% to 83 billion pesos (US$3.7 billion). But with new service launches and a raft of new releases, 2021 will see renewed momentum, with SVoD expected to fuel the next phase of market growth.”

SVoD subs climbing fast, service launches complementing not cannibalising

Despite the current challenges surrounding COVID-19, the global pandemic has also provided a range of opportunities for Mexico’s video entertainment market. SVoD is a clear beneficiary of enforced lockdown, with an uplift in subscriptions and reduced churn that has already seen a jump in the average number of multiple subscriptions per SVoD household, from 1.65 in 2019. Yet the SVoD market was already gaining momentum prior to lockdown, with 42% revenue growth in 2019. Netflix and Claro Video have made large contributions to growth, which has received an added boost from the launch of Apple TV+ and StarzPlay.

“By the end of 2020, the SVOD market will have grown 50% year-on year,” says Wright, “exceeding 17 million subscriptions and helped along by the expected launch of Disney+ in Q4 2020. With expected service launches from HBO Max and Hulu in 2021, which are set to provide complementary content and very little overlap, the number of multiple subscriptions will continue to climb.”

TVoD gets a boost from Amazon Prime

Transactional home video is also a high spot for the industry, benefiting from the renewed focus on stay-at-home entertainment and with the recent launch of Amazon Prime’s transactional video store a key market stimulus. Although a lack of major new releases in H2 2020 provides challenges, Futuresource still anticipates steady growth this year to nearly 800m pesos (US$36 million). Development will continue into 2021, as the full benefit of Amazon Prime entering the market is realised, coupled with a stronger slate of titles due to delayed releases because of COVID-19.

A bright future unfolds

“Mexico’s video entertainment market will emerge from 2020 with strong growth prospects and a clear roadmap for success,” says Wright. “SVoD will play a leading role, accounting for around a third of total video spend by 2024, yet there will be opportunities and success stories to celebrate across the board. With a projected annual growth rate of 8% between 2020 and 2024, and consumers spending 114 billion pesos (US$5.6 billion) during the last year of forecast, there is everything to play for.”

For further information on Futuresource Consulting’s Mexico video insights report, please contact Kailash Morjaria via kailash.morjaria@futuresource-hq.com.

About the author

Joanna Wright

^{Joanna is a senior market analyst with 15 years’ experience, working at Futuresource since 2005. Following seven years in the imaging division, Joanna joined the Entertainment Content Delivery team and is closely involved in researching, analysing and consulting on key content industry developments worldwide, with a particular focus on the digital distribution of entertainment content. Joanna graduated from the University of Bath with a BA in European Studies specialising in French and Italian.}