Telefónica expands Viacom deal to mobile, delaying the Netflix effect

On the back of a market-altering deal with Netflix in its native Spain last week, Telefónica has chosen a different flavor of partner for its streaming operations over in Latin America, selecting US media company Viacom International Media Networks to revitalize its mobile-first Movistar Play offering.

This is essentially the polar opposite move. With Netflix being so well-established in Europe, a partnership makes sense; whereas in Latin America, Netflix does not enjoy the same level of dominance despite its obvious rise in popularity. Telefónica has therefore sought the helping hand of Viacom’s content clout to boost Movistar Play uptake – delaying the inevitable eventuality where Telefónica expands its Netflix partnership to Latin America.

Significantly for Viacom, the deal is the US media conglomerate’s first for a telco to carry all its channels. For Telefonica, handing Viacom its first full telco contract perhaps shows how far the operator is prepared to go to refresh interest in its video operations in Latin America, without mirroring what happened in Spain last week.

Viacom is bringing live streams of channels MTV, Nickelodeon, Nick Junior, Comedy Central and Paramount to Movistar Play subscribers, as well as a suite of Viacom’s on-demand apps including MTV Play and Noggin. Live and on-demand content from Viacom is already available to Telefonica’s pay TV subscribers across Latin America, but now extends to mobile devices, PCs and smart TVs via Movistar Play, which is available free to TV and internet customers and also offers titles for rent.

Individual countries relating to the deal were not listed, so the deal therefore looks to be continent-wide, where Movistar Play is available – amounting to 13 countries.

We still believe expanding its Netflix partnership to Latin America is a sensible move for Telefónica to make in the near future, particularly in key Latin American markets including Brazil where the OTT service operates under the Vivo Play brand, which has not fared as well as Movistar Play. Perhaps Telefonica will make such a move through a mobile partnership with Netflix, before taking the plunge to TV.

Peru received Movistar Play most recently, rolling out in August last year, and two months after launch was reported to have picked up 300,000 registered users, with Telefonica claiming it would end the year on 700,000 Peruvian Movistar Play streamers. This surge was primarily due to streaming the 2018 FIFA World Cup qualifiers in which the Peru national team were playing, so usage will have tailed off since and will spike again when the next match is aired.

Rethink calculates there are currently some 6 million regular TV Everywhere users in Latin America, compared to 17 million SVoD subscribers – of which 12 million belong to Netflix and a large share are on smartphones.

“Mobile streaming is growing in popularity across Latin America – to stay in touch with our young audiences we need our brands and content to be everywhere they are,” said SVP of content distribution Rita Herring.

Movistar Play being a TV Everywhere service means Netflix is not a direct competitor as such, but as Telefónica is forced to embrace OTT more and more, it will be fearful of turning pay TV subscribers to the Netflix model before it can dig in its claws. As we said, this is simply delaying the inevitable.