wef-latam-factpack

7/28/2019 WEF-LatAm-Factpack

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This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent

Future of Content CreationLatin America Factpack

May 2011


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Agenda

Macro overview

Media market overview


2WEF LatAm Factpack DRAFTSAO

Trends in online media

Case studies


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Latin America (LatAm) Overview

LatAm World

Population (2010, in M) 582 6,852

Urbanization 80% 50%

GDP (2010, US$) 4.7T 61.9TGDP/ capita (US$) 6.8K 11.8K

Real GDP CAGR 2000-10 3% 4%

Inflation1 (%) 6% 4%

Columbia

Venezuela



(1) GDP Weighted average(2) Ukraine (0.710) is the 69

th; Iran (0.702) is the current 70

thcountry

(3) Similar to countries like Sri Lanka, Gambia and ZimbabweSource: Euromonitor; IFS; CIA World Factbook; IMF, World Economic Outlook Database, October 2010

Latin America:

2010 HDI: 0.704(world rank2: 70)

2010 GINI Index: 49.8

(world rank3: 80)

Latin America share of the world:

8%Population

8%GDP

Mediamarket

4%

Internetusers

11%

Brazil

Argen

tine

Chile


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LatAms macroeconomic fundamentals haveimproved significantly over past 20 years

... decreasing interest rates...

5 7 9 1 3 5 7 9 E

Inflation

rate

Inflation under control...

Average inflationduring 1991-

1994*: 571% p.a.

Averageinterest during1991-1994:1,172% p.a.



1995 1997 1999 2001 2003 2005 2007 20092010E

improving government budgets

1 1 1 2 2 2 2 2 201

... More sustainable GDP growth

*Data points excluded due to high levels of inflation in the period: 1991 215%, 1992 393%, 1993 783%, 1994 850%Source: CEPAL, Euromonitor, IFS, IMF


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In LatAm, 7 countries account for ~90% of GDPwith huge income disparity across countries

GDP per capita (2010E, US$)

21.9k


5WEF LatAm Factpack DRAFTSAOSource: International Monetary Fund, World Economic Outlook Database, October 2010

0.7k

33x


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Forecasts suggest LatAm will continue to have alarge working age population

2020F

Men Women



Note: Working age = between 15 and 65 yearsSource: Euromonitor, Bain analysis

65+

15-64

0-14


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LatAm income levels are rising; likely to drivehigher entertainment and media spend

60

80

100%

LatAm population distribution by annual income



0

20

40

2005 2010 2015F

17 23 30% populationwith >$15k

annual income


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Agenda

Macro overview





Case studies


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Summary

SubscriptionTV

9% 24% 49%

Penetration is expected to rise as

economy recovers

Satellite and IPTV to grow

Argentina and Chile will show fastestgrowth and adoption

Penetration (%)

SubscriptionTV

SubscriberGrowth

(05-09 CAGR) LatAm World avg.Future Growth Drivers



Internet 20% 40% 45%

Governments across all key countrieshave launched national levelinitiatives for increasing internetpenetration

Mobilephones

19% 97% 79%

Chile, Argentina and Brazil willcontinue to see good growth

With growing smartphone and 3Gpenetration, mobile phones will gainimportance as a media consumptionplatform

Note: Subscription TV and Internet penetration are in terms of Household penetration; Mobile phonepenetration is as a percentage of total population

Internet

Mobilephones


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Subscription TV penetration far below globalaverage, but great dispersion among countries

Availability oflarge number offree channelsdriving downpenetration



Note: Regional aggregates are based on the top countries in the region; E.g. LatAm market built on thebasis of 6 major geographies, which form ~90% of LatAm GDPSource: PWC Global Entertainment and Media Outlook 2010-2014

enetrat on s

expected to riseas economyrecovers;

satellite andIPTV to grow

Arge

ntin

aCh

ile

Vene

zuel

a

Mex

ico

Colo

mbi

a

Braz

il


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LatAm internet penetration is near globalaverage and expected to grow rapidly

60

80%

Internet household penetration (%)

Latam avg.(2014)

50

62 63 60 59 57



Note: Regional aggregates are based on the top countries in the region; E.g. LatAm market built on thebasis of 6 major geographies, which form ~90% of LatAm GDP; Does not include mobile internetSource: PWC Global Entertainment and Media Outlook 2010-2014

0

20

40 Latam avg.(2009)

Braz

il

Chile

Arge

ntin

a

Mex

ico

33

Colo

mbi

a

25

Vene

zuel

a

23

4237 37

2009

2014


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LatAm mobile penetration is above globalaverage with strong growth expected

150

200%

Mobile connection penetration (%)

Latam avg.

145

166

144

128124 104


12WEF LatAm Factpack DRAFTSAOSource: Wireless Intelligence, 2011

0

50

100 Latam avg.(2010)

(2015)

Arge

ntin

aCh

ile

Braz

il

Vene

zuel

a

103

Colo

mbi

a

94

106

Mex

ico

83

100

Othe

r Lat

am

82

99

108

2010

2015


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Smartphones sales and 3G subscribers areexpected to grow exponentially



Mobile phones will gain importance as a media consumption platform as more and morepeople own smart mobile devices connected to high speed networks

Source: IDC; Wireless Intelligence; Bain analysis


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TV forms ~50% of ~$40B LatAm mediamarket; relatively uniform across countries

Internet

Music



TV

Film

Print

VideoGames

Radio

Out of Home

Note: *LatAm market built on the basis of 6 major geographies, which form ~90% of LatAm GDP ; Internet and mobile access revenue is excludedfrom the total media and entertainment market; TV exclude online and mobile TV, Print include Newspaper, magazines, B2B publishing, and consumerand educational books (exclude revenues from digital and electronic versions); **Others include Chile, Colombia and VenezuelaSource: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates


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While traditional media is thriving, ad spend ondigital media is growing much more rapidly

dia



Note: LatAm market built on the basis of 6 major geographies, which form ~90% of LatAm GDP ; TVexclude online and mobile TV advertising, Print include Newspaper, magazines, B2B publishing, andconsumer and educational books (exclude advertising revenues from digital and electronic versions)Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Traditionalm

e


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Agenda

Macro overview





Case studies


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Number of online users has grown rapidly, butconsumption per user still materially below U.S.

25

30

35

Global

Latam

U.S.

25 25 24 2423

20

Average hours spent online per user/month (2010)

25% short ofU.S. bench-

mark



0

5

10

15

Argentina Peru Brazil Mexico Chile Colombia

Notes: Internet users are people with access to the world-wide network via home, work internet enabled computers,internet cafes or mobile phones; Average hours spend online include only 15+ Internet Audience

Source: Euromonitor; comScore


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Online video has high reach among online usersbut consumption below intl benchmark

Online Video

60

80

100%

84

87 87

83

87

Online video reach/web population (2011)



Notes: Include only 15+ Internet AudienceSource: comScore

Given the regions appetite for Entertainment, expect to see continued growth in online videoconsumption as broadband penetration continues to increase

Comscore, 2011

0

20

40

USA Mexico Brazil Chile Argentina

ll f h


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Users are willing to pay for the content; >60%will consider paying for movies, music & videos



Notes: Based on a survey on 27,000 consumers across 52 countriesSource: Nielson (Feb 2010)

S i l ki f i ifi


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Social networking accounts for a significantamount of time spent online



Notes: Include only 15+ Internet Audience; IM contribution in Brazil calculated by using average ofaverage time spent by an IM user in Chile, Argentina and Mexico; *Include data from time periodranging Jun 2010 to Jan 2011; **Include e-mail, Search/navigation, amongst other online categories

Source: comScore; Bain Analysis

S i l t ki h hi h h


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Social networking has very high reach amongLatAm online users

Social Networking



Chile

Peru

Arge

ntin

a

Vene

zuel

a

Mex

ico

Colo

mbi

a

Braz

il

Euro

pe

Glob

al

Asia

Pacif

ic

North

Amer

ica

Lata

m

Notes: Include only 15+ Internet AudienceSource: comScore

LatAm countries Regions


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with high user engagement

Social Networking



Notes: Include only 15+ Internet Audience; *Include data from time period ranging Jun 2010 to Jan 2011Source: comScore


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Agenda

Macro overview





Case studies


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Summary

Maintaining leadership position but slowly adapting to newformats

One of the fastest growing online business in Latin America has successfully leveraged the online platform for growth

TV Globo

1

Fnbox

2



As a tool for effective consumer engagement and marketing

A cutting-edge business model that allows subscribers to watchwhat they want, anytime, across any device will benefitcontent creators, distributors, aggregators and consumers

Has leveraged Spanish content to cater to growing demand forHispanic media and expand internationally

Social media

TV Everywhere

Televisa

4

5

TV Globo: Traditional media maintaining


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TV Globo: Traditional media maintainingposition but slowly adapting to new formats

Situation Key learning

Results

Brazilian-based television network that is thelargest network in Latin America and thirdlargest in the world

Offers complementary media outletsincluding a newspaper and radio station

Understand how consumer behavior andexpectations are changing in terms ofcontent distribution

- Television viewing is a crucial aspect of anindividuals daily lifestyle in LatAm, especiallyBrazil, thus Globo strives to provide a variety ofdifferent content to retain its audience

- Popularity of internet has caused Globo to adapt

1



Globo in Brazil- Reaches 99.5% of potential viewers, practically

the entire Brazilian population

- Possess segmentation capacity due to itsnetwork affiliates

- Almost 90% of the network's programming isproduced in-house

Globo in the world- The international channel targets Brazilians and

other Portuguese-speakers outside of Brazil

- Globo TV Sports is successful in distributing highquality content regarding Brazilian sports eventsabroad

- Licensed to over 50 countries, translated to 24languages and reaches an audience of 100 millionviewers worldwide per day

free access to their newspaper online

- Globo also encourages consumer engagementby allowing viewers to vote and comment onpopular reality shows and soap operas online

Although Globo is adapting to increase itsdigital offerings, it has not pushed asaggressively as some of its American

counterparts to be at the forefront of contentinnovation

- Fewer user-generated content and options

- Fewer acquisition activity to date that pointstowards embracing new media formats

Source: Globo website

Fnbox has successfully leveraged the online


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Fnbox has successfully leveraged the onlineplatform to grow in Latin America

SonicoTarjetas

Telefnicas

Socialnetwork inLatAm thatallows membersto organizetheir accounts

Enables enduser to makecheapinternationallong distancecalls from

Founded in 2002

Fastest growingonline business inLatin America

Estimated sales of$8M in 2010

Description Products

Recarga.com

Enables endusers to addcredits totheir prepaidmobile

hones in

Leadgen

Connectsadvertiserswith potentialclients byofferingrelevant

2



through 3

profiles:- Private,

Public andProfessional

Grown to>50Mregistered

users since itstarted in 2007

mobile phones

and landlines

Sold >500Mminutes andhas ~200,000customers

- Projected to reach

$20M by 2011

Raised $6M for aminority stake fromDN Capital andAngel/privateinvestors

Recognized as the 5th

largest tech startupby BusinessWeek andYouNoodle.com in2009

Source: Marketwire, Dec 2010; Lit. Search

Latin America

and US

Sold >750Mminutes since2002 and has~400,000customers

advertising

throughdemographicand interest-based targeting

Generates3.3M qualifiedleads daily

Companies are using social media as a tool for


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Companies are using social media as a tool foreffective consumer engagement and marketing

Ford FusionHybrid, Brazil

Panini, Brazil

Created aplatform toanswerconsumerquestions

Created aplatform whereeach of the 4partner blogs,representingthe 4 schools of

88% of theinternet users inLatin America usesocialnetworking sites

~50% of Latin

Increasing use ofsocial media

Examples of successful campaigns

Paso de Lostoros, Argentina

Created aplatform basedon its taglineImmortalVengeancewhere eo le

Visa, Mexico

Invited shortvideosexplainingbenefits ofcredit cards

campaign

3



rea e ser es

of short filmswhere RicardoMauricioanswered thebestquestions

Hogwarts

witchcraft(Harry Potter),posted somechallengesonline

companies usesocial mediaplatforms forconsumerengagement

Companies also

leverage socialmedia as animportantmarketing tool

Source: Synthesio, Jan 2011; Lit. Search

could leave

bittermessages fortheir exes

eo w

maximumvotes won atrip for 2 toSouth Africawith tickets toWorld Cup

11,255 Q&A 1,000 average

views perYouTube video

19% increasein cardpayments inMexico duringthe campaign

64 videoentries

All copies of thebook sold outin 100,000visitors

>6000 of thebest messagespublished

Details

of

Success

TV Everywhere is a cutting-edge business


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TV Everywhere is a cutting-edge businessmodel emerging in Latin America

What is TV Everywhere or TV 360

A solution that allows subscribers to watch what they want,when they want it, across any device

The solution is available for implementation with any

internet-connected device, including PCs, game consoles,tablets, smartphones, connected TVs etc.

TV 360 enablesproducers, content aggregators, pay TV operators, internet

4


28WEF LatAm Factpack DRAFTSAOSource: Literature searches

Beneficial tocontent creators,distributors,

aggregators andsubscribers alike

Consortium ofspecialized players

to introduceTV 360

(Pay OTTTV platform)

(Provides contentmanagement)

(Supports throughhardware architecture)

(Product roll out underComtelsat TV 360 offering)

porta s an ISPs to generate greater ncome rom rem um on ne content.

Interested operators & media cos can quicklylaunch a pay OTT TV service.Vision2mobile.com, 2011

The offering, combining content, technology and service, is the mostcomprehensive on the Latin American market. It willsatisfy subscriberdemandto access premium contentthrough any screen available.

Rapidtvnews.com, 2011

Televisa entered into alliances and made


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Televisa entered into alliances and madeacquisitions to expand international presence

2010 USA

Grupo Televisa plans to invest $130M in UnivisionCommunications, in order to expand existingcooperation between the two

Helps strengthen its foothold in USA, animportant market beyond Mexico

2010 USA JV to produce movies for the fast-growing

Hispanic population in the US, who account for

INTERNATIONAL ALLIANCES5Year Region Partner/ target Description



1 4 o t e country s requent mov egoers

2008 USA

Telemundo to air Mexican soccer under agreementwith Televisa

Meets increasing US demand to view Mexicansoccer matches

2007 Argentina

Acquisition of Editorial Atlantida, one ofthe leading

magazine publishers in Argentina

Annual circulation of12.8M copies in 2006

2000-2006 Primarily USA

Univision, Venevision, ClearChannel Entertainment,

Hispanic Publishing Group, EMIand others

Multiple alliances and JVs to penetrate the growingHispanic media market in USA

Segments include TV, publishing and music

Note: List of partnerships is not exhaustiveSource: Datamonitor; Lit search

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