LATAM Streaming Space Heats Up With Amazon Prime In Brazil

The streaming market (both audio and video) is rapidly growing in Latin America (LATAM) driven by increasing smartphone and Internet usage, courtesy of improving digital infrastructure.

Amazon’s (NASDAQ:AMZN) launching of Prime in Brazil, which will provide full access to video content and music content on Prime Video app to the country’s subscribers, is a testament to the fact. This move in turn will help the e-commerce giant capitalize on LATAM’s video and streaming market.

In fact, this will provide Amazon a competitive edge against Netflix (NASDAQ:NFLX) , Apple (NASDAQ:AAPL) and Spotify (NYSE:SPOT) , which are also making every effort to strengthen presence in the region.

Growing Streaming User Penetration in LATAM

Proliferation of streaming services in countries like Brazil, Chile, Argentina, Mexico and Colombia, which form a significant part of LATAM, is improving rapidly.

Per a report from Statista, user penetration for 2019 in the video streaming markets of Brazil, Chile, Argentina, Mexico and Colombia are expected to hit 20.1%, 14.4%, 13.6%, 13.3% and 22.5%, respectively. The same for 2023 is projected at 22.2%, 20.2%, 16.3%, 15.7% and 25.7%, respectively.

Further, the Statista report shows user penetration for 2019 in the music streaming markets of Brazil, Chile, Argentina, Mexico and Colombia are likely to reach 18.9%, 19.6%, 19.8%, 14.8% and 17.3%. The same for 2023 is projected at 20.6%, 23.3%, 22.1%, 16.2% and 19%, respectively.

According to data from Digital TV Research, video streaming subscriptions in LATAM is likely to reach 51.1 million by 2024, significantly up from 27.12 million in 2018.

Year-to-Date Price Performance

Netflix’s Robust LATAM Initiatives

The streaming giant has presence in 43 Central and South American countries, which includes Brazil, Argentina, Chile, Colombia and Mexico.

Further, Netflix is making every effort to expand content portfolio. The company’s partnership with Telefonica (MC:TEF) helped in integration of Netflix app into Pay TV set-top boxes. Additionally, the deal has made Netflix accessible via Movistar Play Video OTT service.

All these initiatives enable Netflix subscribers based in LATAM to watch their favorite shows and movies on Telefonica’s devices and platforms.

Further, its increasing investments on regional content remains a major positive. The company’s original content portfolio includes Club de Cuervos, La Casa de las Flores, Ingobernable, Diablero and Historia de un Crimen franchise.

We believe these endeavors are likely to strengthen Netflix’s market share in LATAM. Per the Digital TV Research report, Netflix’s video streaming subscribers’ base is likely to hit 20.5 million in 2019 and 26.3 million by 2024.

Apple & Spotify’s Initiatives

Apple, at its special event held on Sep 10, announced that its video streaming service called Apple TV Plus will be launched on Nov 1 in 100 countries including Brazil and Mexico. Notably, the service will stream the iPhone maker's original TV shows and movies.

Meanwhile, Spotify continues to gain momentum in LATAM owing to rising demand for music streaming services in the region. The company is witnessing strong growth in its paid subscriber base on the back of rising investments.

Reportedly, Spotify is planning investments to strengthen staff base further in the region. Moreover, the company recently rolled out its Premium Duo plan as pilot test in Chile and Colombia. Further, the service is being launched in countries like Argentina, Bolivia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru and Uruguay.

Amazon’s Aggressive Stance

Amazon’s deal with Viacom (VIAB) for the exclusive streaming rights in LATAM allows it to stream Homens? on Prime Video. Further, Viacom International Studios’ production Dani Who? will be also streamed on Prime.

We believe these endeavors along with Prime in Brazil, which carries other benefits like rapid delivery and customer loyalty, are likely to aid its adoption rate in LATAM.

Per the Digital TV Research report, Amazon’s video streaming subscribers’ number is likely to hit 3.7 million in 2019 and 9.5 million by 2024.

Zacks Rank

Amazon, Apple, Spotify and Netflix currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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