As of the second quarter of 2022, the subscription to streaming platforms amounted to 12.6 million, a figure equivalent to 6 out of every 10 Mexican Internet users with access to SVOD platforms, according to data from The Competitive Intelligence Unit.
A survey of YouGov It also revealed that 62 percent of the population in Mexico consumes content through Video-on-Demand (VoD) services at least once a week.
These consumers reconsidered their spending on exclusive content over the past year, as 2022 closed with inflation of 7.82%, the highest rate in more than two decades.
Given a panorama of economic uncertainty and inflation levels changing from one moment to the next, where general prices reached an annual growth rate of 8.41 percent by the end of October 2022, thus exceeding the upper limit of the goals of the Bank of Mexico, The Mexican consumer had to reconsider their spending priorities on entertainment and Subscription Video On Demand services (SVOD) or streaming.
According to the latest data from the National Institute of Statistics and Geography (Inegi), the inflation rate with which the year closed was 7.82 percent per year, the highest level seen in 22 years and so far this century; However, this trend is not exclusive to Mexico, since the inflationary increase throughout the world was reflected in market movements, for example, with streaming, where platforms such as Netflix, Apple TV +, Crunchyroll, Disney Plus and many more they began to adjust their subscription plans or launch new ad-supported systems.
the landscape of streaming in Mexico
The subscription video-on-demand platform market (Subscription Video On Demand or SVOD, for its acronym in English) is in the focus of attention of the whole world in this 2023, since its dynamism, attraction and recruitment of new users is at risk due to rising inflation and a possible economic recession.
According to an investigation by The CIU, in Mexico, although the pandemic accelerated the hiring of this audiovisual content, reaching an annual growth of 18.2 percent in the fourth quarter of 2020, by the first half of 2022 this level had already decreased to less than half, reaching just 8.4 percent.
Today, the continuous loss of subscriptions and the increasing preference for other competitors, caused platforms to launch a new “basic with ads” plan, with reduced prices, lower content resolution and a limited catalog. An example of this is Netflix, which has already started its economic plan for 99 pesos a month, but who had a nebulous start after, with its first two months of testing, it was forced to return part of the money to advertisers for not complying with the promised visualizations.
Inflation was also reflected in the second half of 2022, precisely with the loss of subscriptions: Netflix it reached a participation of 61.1 percent of the total contracts, with a decrease of 2.4 percentage points compared to what was registered at the end of 2021; Disney+ had 12.8 percent of SVOD subscriptions; HBO Max 10.3 percent; Y Amazon Prime Video 7.6 percent.
By contrast, Star+ It increased its market share by 2.1 percent by integrating as a combo with Disney+ and even with the launch of Lionsgate+ (formerly Starzplay) at affordable prices and with strategic alliances through telecommunications operators.
Inflation hits streaming in Mexico; 70% canceled a subscription in 2022
The consumers in Mexico wrestled in 2022 with inflationary concerns that increased their willingness to cut their spending on trading platforms. streamingeven more than what happened in Spain, the United Kingdom, Canada or China.
According to a survey conducted by YouGov in the second half of 2022, 62 percent of the country’s population consumes content through Video-on-Demand (VoD) services at least once a week, this being the highest percentage in the 18 markets analyzed and a figure well above the global average of 48 percent.
Likewise, another study carried out by the market research and data analysis firm states that More than 70 percent of the Mexicans surveyed canceled at least one of their subscriptions to streamingmainly due to the need to reduce household expenses or because the rate was too high.
In fact, the higher cost of these fees seems to be especially rejected in Mexico in relation to other countries. Already at the beginning of May 2022, a survey had revealed that consumers in the country showed a greater predisposition to cut their spending on streaming than the audiences in the other markets analyzed, assuming that the household budget was negatively affected by the rise in the cost of living.
However, since then, and despite the economic complications, VoD services in Mexico have the advantage that a good part of consumers seem to instinctively reject piracy, which helps them maintain a certain profit margin and clientele. A previous study found that 32 percent of Mexicans would not search for sites to pirate music, video, or sporting events when they know there is a paid alternative.
Mexican consumers are also much more open to alternative business models, for example, more than half say they would agree to see more ads on their social media platforms. streaming as long as that means cheaper subscriptions. This percentage (along with the United Arab Emirates) is the highest recorded by YouGov in 18 international markets.
Also, according to the data collectedMexicans are twice as interested as the international average in that the companies of streaming add subscription options for groups, an attractive alternative to reduce the cost that each individual must pay for content without breaking the terms and conditions of service.
Streaming forecasts 2023-2026
Despite the uncertain global economic outlook with which the year began, the market for streaming of movies, series and music will continue to grow in Mexico, at least until 2026.
According to PwC estimates, the increase in the value of this market will be 1,257 million dollars by the end of 2023, 12.83 percent more than the previous year,
Also, the ” Global Entertainment & Media Outlook 2022-2026″ Prepared by the firm, it foresees that in three years the value of Over The Top (OTT) platforms in the country will reach 1.899 million dollars, which dictates that between 2022 and 2026 growth would be 32.42 percent.
“Mexico has the largest OTT sector in the Latin American region and is ready to extend its lead over Brazil in the next five years”ensures the study.
Regarding the sale of musical content, the growth perspective remains at a lower level in the medium term, since between 2021 and 2022 this type of streaming platform grew only 14.65 percent, closing the year with a value of 313 millions of dollars; by 2026, the market growth is expected to be 28.11 percent, with a value ascending to 401 million dollars.
Thus, considering all the competition in the SVOD ecosystem and the new options available to maintain profit margins even with the increase in inflationary prices, the platforms of streaming they should consider very carefully what kind of business strategies they want to implement in Mexico and the world to prevent their customer base from collapsing and, at the same time, help democratize access to digital content.
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