Mexico City — The advertising-based video on demand (AVOD) business began to edge onto more and more users’ screens in Mexico in 2021 as an option for media companies operating in Mexico.
The business model, which allows consumers to access content in exchange for viewing advertising, represented 13% of penetration of all the business models used by streaming platforms in the country, according to a study by Mexico’s federal telecommunications watchdog IFT.
“In 2021, subscription and content playback with advertising were the business models with the highest levels of consumption among users of over-the-top (OTT) platforms, the IFT said.
The share of the AVOD business was equal to that of businesses that charge customers subscription to access content in 2021, according to the study.
The AVOD business was used by 24% of program creators, i.e. platforms that create their own content, and 7% by independent OTTs that do not belong to program creators or cable operators.
The hybrid business model, which combines different types of business, such as in the case of América Móvil’s Claro Video, is the most used by 39% of companies, while 18% of businesses use free options.
Until last year, AVOD, which is used by platforms such as YouTube, had not stood out as an offering in Mexico, but media companies such as the recently created Televisa-Univision, Grupo Salinas’ TV Azteca and options such as Canela Media, are now pushing this line of business with new products designed for the Spanish-speaking market.
Televisa-Univision’s Vix uses a hybrid model that mixes an AVOD and an ad-supported subscription video-on-demand (SVOD) option.
“Basically the AVOD market doesn’t exist, we are creating it,” said Alfonso de Angoitia, co-CEO of Grupo Televisa, in a meeting with analysts and investors in July 2021.
The Spanish-speaking AVOD market could represent between $3-$4 billion, he added.
Mature markets such as the United States have registered a slowdown in the entry of new services following the initial “frenzy”, according to S&P Global Market Intelligence, which says the U.S. market has trended more toward SVOD options.
“Out of a total of 159 launches tracked between 2005 and 2021, 106 (66.7%) were SVOD offerings, while 53 (33.3%) generated most or all of their revenue from ad-supported free viewing,” Seth Shafer, an analyst at S&P Global Market Intelligence, wrote in a February note.
One of the few new offerings expected by the analyst for this year in the U.S. market is Televisa-Univision’s Vix.
Streaming Grows by 50% in Mexico in 2021
The streaming market in Mexico brought in total revenues of close to $1.9 billion in 2021, according to consulting firm Business Bureau Mexico, with the entry into operation of platforms such as Disney+, HBO Max and Paramount+.
The figure represented an increase of 49% over the annual revenues of $1.27 billion recorded in 2020, a year that was marked by the oubreak of Covid-19 and the subsequent search for more home entertainment options, according to IFT.
The telecommunications market regulator highlighted the participation of independent platforms such as Netflix, YouTube Premium and Amazon Prime, which represent 49% of the OTT offer in the country.
Platforms such as HBO Max or Paramount+ represent 43%; while 8% are linked to cable operators, such as Claro Video or Izzi Go.