The regulator found that adoption of streaming-based video services, and the convergence of audiovisual markets, was dependent on local network development
Cade reviewed its definition of the video-on-demand (VoD) market in comparison to international peers
On 25 July 2024, the Brazilian Department of Economic Studies of the Administrative Council for Economic Defense (Cade) released a working paper detailing its market study on the video-on-demand (VoD) market. The study sought to review the boundaries and features of the VoD market in light of technological developments and to offer international comparisons to the Brazilian VoD market. In the context of competition policy, Cade also analysed whether the VoD market has converged with other audiovisual markets, especially as a result of the rapid growth of digital streaming platforms such as Netflix.
The study detailed how competition between VoD and traditional pay TV was highly dependent on access to high-speed broadband
Broadly, Cade found that the VoD market in Brazil has developed similarly to other international markets, with the same platforms, including Netflix and HBO, enjoying similar market shares globally as in Brazil. The market both in Brazil and in other countries was also found to be dominated by subscription VoD services, outpacing growth of pay-per-view services and ad-based VoD revenue models. However, when the potential for market convergence between traditional pay TV services and VoD services was considered, Cade found greater differences in the development of markets around the world. Though competition authorities were overall likely to maintain an open definition of audiovisual services markets generally, the Dutch Authority for Consumers and Markets (ACM) and the US Federal Communications Commission (FCC) saw greater levels of “cord-cutting” – i.e. the substitution of VoD services for pay TV – and therefore greater competitive pressure on pay TV providers. In Brazil, however, Cade found that the more limited high-speed broadband rollout created regionalised audiovisual markets that varied greatly in the degrees of convergence between VoD and pay TV. Without access to improved connectivity, consumers were less likely to adopt VoD services either in place of or in addition to pay TV. Cade also found that ISPs were increasingly likely to bundle pay TV with broadband services, which also worked to protect the market share of pay TV. Summarily, the Brazilian regulator found that connectivity in all parts of the country was not yet developed enough to support greater convergence in audiovisual services, and while potential future substitutability between services could be considered in merger decisions, it was not prepared to change its approach to defining the VoD market in relation to pay TV.
Regulators around the world are reconsidering audiovisual market structures as advanced connectivity improves access to streaming services
A number of other regulators around the world have opened similar market studies on the evolution of audiovisual markets, again citing the rise of large platform distributors such as Netflix and YouTube as cause for reconsideration of competition enforcement. In South Korea, the Korea Communications Commission (KCC) has opened an inquiry into the impacts of VoD services, especially ad-based VoD services, on broadcast markets. The Autorité de la concurrence (AdC) in France also launched a study on the online video content creation market, noting the market has become increasingly ‘professionalised’ and now represents a genuine economic activity in the context of competition law. Unlike the Brazilian case, both the French and Korean studies engage markets where more advanced network development is likely to create nationalised audiovisual markets that are further along in the process of convergence as access to streaming services improves.
