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The Search for Growth

Two interesting news stories last week: First, reports that the broadband video (SVOD, AVOD, and TVOD) market in Mexico grew 39% in 2016 (to over US$200m). Second, Latin American telco giant América Móvil announced plans for a 2017 US launch of their Latino-focused broadband pay-TV channel called Nuestra Vision. Is this merely a coincidence, or an important signal about the future of TV? Two thoughts.

1. Growth is Hard to Come By
Everybody in the business world loves growth. Growing companies tend to be happy companies. That said, it is getting harder and harder to find growth in the TV industry, and for three reasons.

  • First, simple demographics. The US population is aging, immigration is slowing, and birth rates are flat at best. The only bright spot in this picture is the Latino population, which accounts for an increasingly large percentage of all population growth.
  • Second, shifting viewing behavior. Younger viewers spend plenty of time on screens, but just don’t watch legacy TV at the same rates as previous generations did. The traditional TV audience has become a non-renewable resource. When it’s gone, it’s gone.
  • Third, simple supply and demand. There’s never been more TV content produced than right now (and may never be again). All this supply is ultimately chasing the same pool of viewers, which means individual shows (and entire channels) are more likely to shrink than grow audience.

The bottom line: the days of a rising tide lifting all boats in the TV industry are over. Industry leaders must become more creative and open-minded about new sources of growth, including opportunities with rising Latino populations on both sides of the border. Which brings us to our second point.

2. Latinos Are Critical to the Future of Broadband Video Services
The dirty little secret of technology diffusion is that new technologies are often (but not always) elitist. Blackberry initially made its name with investment bankers on Wall Street. Teslas are more common than Ford F-150s at the Stanford mall in Palo Alto.

The problem with this tendency is that it blinds people to data that is inconsistent with this pattern. It took years for the mobile industry to recognize that the most interesting mobile payment ecosystem was emerging not in London or New York, but in Kenya (Safaricom’s M-pesa).

The same thing is happening today in broadband video. TDG has been doing in-depth primary research on consumers for over a decade. We saw TV’s disruption years before other firms, and identified the key trends that would drive it. In the past year or so, however, we started seeing something really interesting in the data. US Latinos were over-indexing (in some cases by large margins) for many of the key attributes we associate with our quantum viewing model. According to the elitist paradigm, this shouldn’t be happening. US Latinos are statistically below average when measured by traditional indicators such as household income or educational achievement. And yet these viewers are clearly embracing broadband video services at high rates on both sides of the border. Something is going on here, and the industry needs to start paying attention.

The search for growth in TV audiences and revenue is becoming more and more difficult. And US Latinos are part of the answer. My new report, The Search for Growth: Latinos, Smartphones, and the Future of US Video Viewing, 2016-2030, will be publicly available this week, and examines these challenges and opportunities in detail.

Stick with TDG and stay ahead of the curve.

Joel is a Senior Advisor for TDG and serves as an advisor and Board Member to the video ecosystem and technology companies. He lives near Seattle, WA.