18 FLEXIBLE, VERSATILE, RESILIENT | MEDIA talk
SPOTLIGHT LATIN AMERICA
CHANGING BUSINESS MODELS DOMINATE
Latin American countries and media companies are feeling the full brunt of COVID-19. Simultaneously, media across the region continue wrestling with the on-going move towards digital solutions, and how to realign their business models to futureproof operations and revenues. In some cases, the optimal route is proving to be M&A.
THE MEDIA SECTOR’S NEW COMPETITORS
After decades with up to 80% of traditional media revenues generated by advertising, there is a need to identify a new primary source of income. Subscription-based business models, as well as cross-selling secondary and tertiary services and products, are gaining ground, as traditional industry silos fall. Today, it is far from unusual to see media companies acquire, for example, a travel agency to complement the services and revenue generated by existing travel media outlets. Specialist and niche media are generally finding the transition less challenging – to some degree due to lower production costs, smaller newsrooms, and more well-defined, specialised audiences. However, we have seen some omnibus newspapers have success and continuously grow online subscription numbers. The pandemic has further speeded up the process – in part because advertising spend has continued to change during 2020.
In many ways, Costa Rica is a microcosmos representation of events throughout the Latin American media industry. After years of consolidation in print, radio and TV, digital solutions have upended the traditional landscape. Here, as elsewhere, it has led to increased pressure to reinvent business models and finding ways of competing with technology companies. Print media is moving from analogue to digital and from ad revenue-based to subscription-based business models. The same dynamics apply elsewhere and integrating new solutions to engage increasingly digital media consumers is a top priority. However, many are playing a game of catch-up with technology-driven first- movers. TV is, perhaps, the best example. According to Statista, Netflix had nearly 31.4 million paying streaming subscribers in Latin America in 2019, generating $2.8 billion in revenue. The number is projected to increase to 42.49 million by 2025. In comparison, the multichannel subscriber base shrunk by around half a million households in 2019.
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