By Lise Alves, Senior Contributing Reporter
SÃO PAULO, BRAZIL – The downturn in Brazil’s economy has led many households to reduce or even cut out all together superfluous items, such as restaurants, outings and travel. The weak economy is also seen as the main factor for the reduction of one of Brazilian’s once booming sectors: paid TV services.
According to ANATEL (Brazil’s national Telecommunication Regulating Agency) the number of paid TV subscribers has been declining since the beginning of the year. In January the Agency registered over 19.65 million subscribers, which represented a 29.79 percent presence in Brazilian households.
The latest numbers, released last week, shows in October a little over 19.39 million subscribers, or 29.22 percent presence. That is a reduction of over 260,000 subscribers in the first ten months of the year.
Brazil is the seventh largest market for paid TV services in the world and the largest in Latin America. Last year the sector grew by 8.7 percent and between 2010 and 2014, when the country’s economy was booming and in fast expansion, the number of subscribers doubled.
For ABTA (Brazilian Association of Paid TV Services) the sector expected a slowdown during the year, but with the retraction of the economy, sector companies are registering a halt in new subscriptions and an increase of households cutting off existing subscriptions.
“Clearly, the activity [Pay TV] is being affected by the economic scenario and expectations,” Oscar Simões, president of ABTA told Agencia Brasil. According to the ABTA president not only is the number of subscribers decreasing, the rate of non-payment of monthly fees by current subscribers is also rising.
For the executive, services like Netflix and Apple TV are not interfering as much in the sector’s growth as the weak economy. Simões says that in addition to the feeble economic activity his organization fears that next year there may be an even greater reduction of subscribers, partly due to the increase in taxes over these types of services.
“The tax burden is one of our greatest concerns. When you add this [tax increase] to a bad moment in the economy the negative effect is very significant, with an increase in prices and a reduction in demand,” added the executive.