Exclusive: MercadoLibre Seeks to Boost Ad Revenue with New Streaming Platform

Sean Summers, Chief Marketing Officer of the Latin American platform, outlines the main objectives for Mercado Play and its differences with Netflix, Prime, and MAX

Mercadolibre.com
August 04, 2023 | 02:00 AM

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Buenos Aires — If there’s something that the Latin American giant MercadoLibre (MELI) does not shy away from, it’s testing out potential revenue streams, even in the midst of adverse macroeconomic conditions, and with a tolerance for failure from its top management. This was the case when it launched its own brands in 2021 – Begonia, Klatter, Tedge, and Basics – which ultimately didn’t prosper on its marketplace, and will now be the case for a new streaming service called Mercado Play.

“Marcos [Galperin] has installed a philosophy with a strong focus on short-term results, but always thinking about where this company could be in three or five years”, which implies “sowing seeds for new lines of business, despite knowing that some will not scale and others will,” says Sean Summers, Chief Marketing Officer of MercadoLibre, in conversation with Bloomberg Línea.

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Although the streaming industry alone generated US$455.45 billion globally in 2022 and could be worth US$1.902 trillion by 2030, according to Fortune Business Insights, for the moment, MercadoLibre’s objective is not to compete head-to-head with players like Netflix, Amazon Prime, or HBO MAX.

Unlike these platforms, MercadoLibre will host its streaming platform within its current app, and its use will not be subject to subscriptions. Instead, the strategy will be to capitalize on Mercado Ads’ existing business, a unit that grew by over 70% in the second quarter and represents 1.6% of the Gross Merchandise Volume (GMV) of sales produced on the marketplace.

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Sean Summers, CMO do Mercado Livre (Foto: Divulgação)dfd

It’s a similar strategy to that implemented recently by Netflix in markets like Brazil and Mexico, and which has been the business model in the United States for platforms like Tubi and Pluto TV. Summers says that MercadoLibre took inspiration from the latter two to start working on MercadoPlay more than two years ago.

“We have an advertising business that has developed a lot over the past two or three years and can help make the [streaming] business self-sustainable,” says Summers, confirming that the Mercado Ads team is already selling ads for the series and movies available on the platform.

The company announced in March that it would add 250 more employees to work on the Ads team this year.

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When asked about the specific monetization and profitability goals of Mercado Play, Summers responds that, for the moment, the objective is to reach an audience of “a few million” people per day. The platform is already available in Argentina and Chile, will reach Mexico and Brazil next week, and will be deployed gradually in the rest of the 14 Latin American markets where the company operates.

With a content catalog that includes series and movies from the BBC, Sony, and Lions Gate Entertainment, and which will be expanded in the coming months, MercadoLibre will aim at a potential audience of 135 million active users in the region.

MercadoLibre does not plan to produce its own original content, according to Summers. “The world does not need another major content developer, there is plenty of good content, there are people who know much more than us about creating content,” he says.

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A saturated market?

Mercado Play’s entry into the streaming market will face challenges. One of the main obstacles will be competing in a market already crowded with other platforms. With established international giants and regional competitors, Play will have to find ways to differentiate itself and attract users.

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Regarding a possible saturation of the streaming market, Summers points to the free aspect of Mercado Play: “Latin America is a region with many unmet needs,” and “there is a very large percentage that would love to have access to content but won’t be able to pay for it.”

Growth amidst rising interest rates

Regarding MercadoLibre’s ability to move forward with new projects despite the recent rise in interest rates, Summers considers that the company has emphasized rigorous evaluation of its employees and has been disciplined with hiring over the last few years.

“In the industry during the last six quarters, there was a lot of panic,” said Summers, adding: “Unlike most companies in the world, MercadoLibre had a very high peak during the pandemic, and we managed to maintain it. Not only maintaining all those gains, but we also grew again last year and this year at those growth rates.”