Skip to content

Connect-World: the leading Telecom magazine, ICT magazine, Telecom magazine, ICT and Telecom Industry Press Releases and Blog.



Welcome to Connect-World, the information and communication technology (ICT) decision makers' magazine.

Increase font size  Decrease font size  Default font size 
You are here:     Home Article Latin America IV 1998 The Successful Introduction Of The Direct-To-Home Activity In Latin America

To join our mailing list click here


The Successful Introduction Of The Direct-To-Home Activity In Latin America

Written by  C. A. Cardoso
Rate this item
(0 votes)
C. A. CardosoIssue:Latin America IV 1998
Article no.:1
Topic:The Successful Introduction Of The Direct-To-Home Activity In Latin America
Author:C. A. Cardoso
Title:Regional Manager
Organisation:Phillips (Brazil) Business Electronics, Brazil
PDF size:32KB

About author

Not available


Article abstract

The evolution of the Pay TV market in Latin America can be seen through the experience of Phillips Brazil and Sky/Net-Sat during the implementation of Direct-to-Home (DTH) activities in the region. Their close co-operation has led to a successful partnership. Phillips’ entry into the Brazilian DTH market by the end of 1997 has been a key factor in boosting overall sales, and has aided both parties to achieve leadership in the Pay TV Satellite business.


Full Article

Taking as reference the experience acquired by Phillips Brazil in co-operation with Net-Sat (the Brazilian Sky Pay TV satellite service operator) during the implementation of Direct-to-Home (DTH) activities in Latin America, and later during the consolidation phase, this article describes the evolution of the Pay TV market in the region. It also provides information about its segmentation in view of the different transmission media and also explains how various - but complementary - sales channels can be utilised as an efficient marketing tool in order to increase the sales coverage for DTH services, especially in large countries like Brazil, resulting in higher sales volume and, consequently, higher revenues. Pay TV Market In 1997, the Pay TV market in Brazil generated business in the order of US$1 billion. It is expected that US$2 billion will be generated in Latin America by the end of 1998. Cable TV services, although still analogue in the region's countries, are responsible for more than 70% of the total Pay TV revenues in the region. In Argentina - the country with the highest penetration degree in the region - 58% of the total number of TV households are connected to a Cable TV network; and this presently represents 95% of the total Pay TV market in that country. However, in countries like Brazil and Colombia, the Cable TV penetration is still below 10%, thus indicating an enormous sales potential for both Cable TV arid Direct-to-Home (DTH) Services. The Multichannel Multipoint Distribution System (MMDS) is practically stagnated in its present form; and, in Brazil, it has just been surpassed by the recently introduced digital KU band DTH satellite Pay TV services. However, especially in Brazil, many operators have a vision that digital MMDS can be a serious competitor to DTH, so they are preparing their business plans based on this assumption. The DTH Digital Services These services utilise high-powered satellites located in geo-stationary orbits (altitude of 36,000 km) in order to keep their relative position to the earth unchanged. The satellites, via their transponders, transmit the compressed digital video and audio signals directly to the home of the DTH subscribers at extremely high , frequencies (KU band, 10 to 12 GHz). Thus, the signals (TV programmes) can be received by small 60cm dishes (Antennas); in regions located at the borders of the area covered by the satellite signals (foot-print), 90 cm antennas may be required in order to maintain a high-quality level of reception. A digital decoder known as Set-Top-Box, is used together with this antenna to decompress the digital video and audio signals. The result is an excellent picture displayed in the TV sets, together with CD-quality audio. The transmitted signals are scrambled in order to prevent unauthorised watching of TV programmes. Thus, the DTH Service Operators have developed exclusive 'Access Control Systems' so that only their subscribers are able to receive and decode the program channels transmitted by them. These systems allow the implementation of Pay-per-View mechanisms where subscribers can watch special events or programmes provided an additional fee is paid per view. Around 140 TV channels, including regular TV programmes and Pay-per-View are available for the DTH subscribers. The Successful Sky and Phillips Co-operation Sky and Phillips have established a non-exclusive co-operation to exploit the DTH market in Latin America. They are already operating jointly in Brazil, Mexico, Colombia and Chile. There are also plans to start operations in Argentina and Venezuela. Sky, in Latin America, is operated by a joint venture composed of News Corporation (US), Globo Organisation (Brazil), Televisa (Mexico) and TCI (US). Phillips developed, and presently manufactures, DTH Set-Top-Boxes specially designed to comply with Sky requirements, becoming thus a major supplier of these products in the region. Phillips also is responsible for the commercialisation of the Set-Top-Boxes in Brazil, where various diversified sales channels are utilised, as further explained in this article. From 1997 to 1998, thanks to the launching of the PAS-Satellites - which increased further the availability of the number of transponders and consequently the number of program channels to be transmitted - the Sky services showed growth of 20% and 33% respectively in Mexico and Brazil. Last September Sky proudly announced to have achieved 518,000 subscribers in the region. In Brazil, Sky expects to achieve 300,000 subscribers by the end of this year, thus consolidating their leadership in a total DTH market estimated to achieve 450,000 Set-Top-Boxes this year. The total DTH market, taking into account all Service Operators, is estimated at around 1 million subscribers on a yearly basis. As a matter of fact, DTH services have proven to be a unique solution for areas with low density of population, where implementing a Cable TV network becomes too expensive. DTH and Cable TV services are indeed complementary solutions; they will grow together. DTH Sales Channels - The Brazilian Experience In order to increase the sales coverage, Phillips has decided to set up a marketing plan whereby various diversified sales and distribution channels would be utilised. The leadership of Phillips Brazil in Consumer Electronics is not only based on the well-known quality and the high technology incorporated in their consumer products, but it is also a consequence of their large sales and distribution network covering more than 3.000 points-of-sales spread out in the country. So, the traditional CE channels were indeed included as a key factor for the success of DTH activity in Brazil. Additionally, we found that the need to establish a large DTH installers network, has created the possibility to use it to further strengthen our sales activities. However, the majority of the installers are small companies who cannot afford to purchase more than a couple of Set-Top-Boxes at one time. Thus, the figure of distributors arose immediately as an intermediate entity, self-supported financially and therefore capable of purchasing large numbers of Set-Top-Boxes in one shot, store them and then re-sell them to installers. Distributors and installers played, in fact, a major role as far as sales in the countryside are concerned. Sales in the 1997-1998 period covered about 3,700 municipalities spread out in Brazil, 78% of which are located in the countryside. A clear pricing and commercial policy was set up in order to avoid possible conflicts between the various sales channels. Last, but not least, Sky/Net-Sat was also used as an important sales channel, being either Telemarketing (0800 number) or via direct mail addressed to the existing C-band (analogue) subscriber base. Sky has indeed reported recently that 90% of their C-band subscribers have already migrated to DTH KU-band. It goes without saying that service also plays an important role in the DTH activity. More than 600 Phillips authorised installers have been trained not only for installation purposes but also to provide the required technical assistance (First Line Support). A system was set up by the Phillips Service Organisation so that within 48 hours, if found to be faulty, a new Set-Top-Box is sent to the installer who replaces the faulty one in any region of the country. Consumers' satisfaction is indeed an important issue. Conclusion The close co-operation between both Phillips and Sky/Net-Sat explains why this partnership is so successful in Latin America. As a matter of fact, Phillips entry into the DTH Brazilian by the end of 1997 has been a key factor in boosting overall sales, and has aided both Sky and Phillips to achieve leadership in the Pay TV Satellite business in Latin America.

Read 3412 times
Login to post comments