Pay TV penetration in Ecuador has dropped from 30% to 11.5% in the last five years. The main factor is the growth of streaming.
Referential image of a television user.
Streaming is taking more and more of the market away from paid television in Ecuador, which closed last year with 544,505 subscribers, which is equivalent to 2 million users compared to 5 million in 2017.
While a basic paid TV plan costs from USD 20 per month, a streaming service can be obtained for USD 8, in the case of Netflix.
The penetration of this service fell from 30% to 11.5%, according to statistics from the Telecommunications Regulation and Control Agency (Arcotel).
This drop was more pronounced with the Covid-19 pandemic, taking into account that people spent more time at home, which fueled the growth of streaming.
Between 2020 and 2021 alone, the subscription TV industry lost almost 10 percentage points in service penetration or some 438,000 users.
What’s happening?
The decline in the pay TV market is due to three factors:
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Streaming growth
The consumption of content on demand, in which users can choose what to watch at any time, gained momentum with the pandemic, explains Hugo Carrión, director of the Imaginar research center.
A study by Digital TV Research estimates that Latin America will have 139 million subscribers to video-on-demand (streaming) services by 2027. In 2021, the region had 75 million subscribers.
The difference in costs between a paid TV service and a streaming one is another important variable in the user’s decision, taking into account that the monthly payment for a streaming service can be up to three times cheaper than a subscription TV plan. .
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Piracy
One of the great concerns of the Association of Telecommunications Companies (Asetel) is the advance of digital piracy in Ecuador.
That is, illegal cable TV companies or applications that offer the content of the most popular streaming platforms, in one place, at a low price.
“They are illegal services that do not pay taxes or for the distribution of that content. There is no control over the provision of these illegal services”, explains Patricia Falconi, executive director of Asetel.
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Taxes
Users of subscription television services pay an additional 15% to the rate itself for the service, for the Special Consumption Tax (ICE).
In addition, they pay 12% for Value Added Tax (VAT). In total, the tax burden is 27%, which affects the final cost of the service.
For Falconi, pay TV stopped being a luxury expense a long time ago. For this reason, the union has requested the Government to exempt the sector from ICE.
Participation by operator
The DirecTV company remains the operator with the largest share in the pay television market, with 41.5%.
This percentage represented close to 226,000 subscribers as of December 2022.
Behind are the local systems that, together, have a 26% share. And, in third place, CNT TV with 17.60% of the market.
