EconomyFinancialHow do streaming platforms benefit cable companies like Megacable?

How do streaming platforms benefit cable companies like Megacable?

The entry of more players from streaming platforms, and its commitment to increase its content catalog through mergers and even withdraw programming from linear television channels, is not a situation that worries Megacable, which competes in the restricted television business . On the contrary, the company sees the streaming platform strategy as an opportunity to improve its service.

Raymundo Fernández Pendones, deputy CEO of Megacable, explains that given the enormous supply of content that currently exists due to the entry and creation of more video-on-demand platforms, restricted television does not require a wide range of channels, but to be more assertive in programming.

“They have asked us what we are going to do because Disney took away four channels that had no content. But why do we want to give the subscriber 150 channels if he really wants 30? Let him pay for quality and we are in favor of that”, commented the deputy CEO of the telecommunications company.

The manager comments that although the entertainment offer is at its peak thanks to the wide variety of streaming platforms, users already face the dilemma of choosing between one application and another because the economy of Mexicans and Latin Americans cannot pay for them all. For this reason, he considers that content integrators such as cable companies will continue to be successful in the entertainment market.

“There is no Latin American economy that can bear the payment of all the apps. We bring an average income of 215 pesos and we are the lowest average rate in the market. If we add all the apps to which a subscriber currently pays, he will pay 1.5 times more than what he pays right now, ”said the Megacable manager.

In addition to being more assertive in the choice of programming, Megacable packages it with Over-the-top media services (OTT).

According to data from The Ciu consultancy, the average monthly expenditure of Mexicans for video streaming platforms is 287 pesos, this without counting the payment of the internet, while for the pay television service the average disbursement is 427 pesos, which includes double or triple play packaging. That is, telephony plus Internet.

The sports segment, one of the pillars of restricted television, is having a reconfiguration to be consumed and seeks to define its audience niche more and more. This is reflected in the sale of the Fox Sports channels, now owned by Grupo Lauman, which last week launched its new offer through a new channel and its streaming platform.

For Megacable, this movement is not harmful, as Televisa argued last year, saying that there would be barriers to accessing sports content. “We, at Megacable, see that we are in the best moment in the history of paid entertainment,” said Fernández Pendones.

“We are not a monopoly entity”

Last December, the Federal Telecommunications Institute (IFT) determined that Megacable had substantial power in nine relevant markets for the restricted television service in the municipalities of San Mateo Atenco and Zinacantepec, State of Mexico; Leon, Guanajuato; Guadalajara and Tonala, Jalisco; Cuautlancingo and San Pedro Cholula, Puebla; and Corregidora and El Marqués, Querétaro.

This concentration was the result of the purchase of Axtel by Megacable in 2019 for 60 million dollars. The operation, authorized by the IFT, involved the transfer of 1,370 kilometers of fiber optic network and the transfer of 55,000 clients, between residential and micro-businesses.

Raymundo Fernández assures that he respects the decision of the telecommunications regulatory body but does not agree that it has determined Megacable with substantial power, considering that it does not have a predominant participation in the sector as other companies such as Grupo Televisa have. also since two years ago it was declared with substantial power.

The company has a 21.06% market share in the restricted television segment, while Grupo Televisa has 62.8%.

Due to the resolution of the IFT, Megacable is obliged to deliver to the Institute in August of each year, the accounting separation information of the previous fiscal year and that this will be submitted to an exhaustive review process. They must also submit reports of the registration of their rates in the markets where they were declared with substantial power.

“It’s ridiculous because we have the lowest rate on the market. What is the authority going to tell us, we are not depredating, we have the largest margin, if we wanted to be a company with monopolistic practices we would have the lowest rate but with little utility because we owe money but we do make money we have a good margin so we are efficient no they can punish us, ”says the manager.

He added that it seems unfair that companies with substantial power be declared because they are in small geographical areas. “I can get to a city and we are only two companies and that is why we have 50% (of the market) so we are both monopolies because it is a very small population.”

The deputy CEO of Megacable assures that this situation, where there are only a few operators in certain areas, is associated with a lack of a digital strategy that supports and encourages the increase in infrastructure in the country.

“We have a lot of problems to grow, what we ask is that the government does its thing and we do ours, we invest a lot of capital, give us facilities and it is a serious problem in the municipalities so that they allow us to grow,” said Fernández Pendones.

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