Why Latin America may just save Meerkat in the long run?


A “This changes everything! periscope.tv” tweet was recently wrtitten by Twitter's co-founder Jack Dorsey. If he’s right, periscope.tv, a live streaming mobile application, will not only change Twitter’s positioning and monetization strategies but it may even spark accelerated change to Latin America’s online video market.

Dorsey's tweet announcing Periscope

Though Latin America internet usage rivals that of the US, the region provides only 1/3 as many visits to Youtube. So why are Latin users, known worldwide to be avid consumers of telenovelas, not as active as their US counterparts on Youtube? After all, Latin Americans are very active on other social media networks like Facebook boasting more users than the US and spending twice the amount of time on the network with penetration rates above 90% in some of its countries. Youtube adoption has been held back by slow network speeds and lack of original content. Slow internet infrastructure in Latam has severely impaired the experience of watching Youtube videos. Average speed in most Latin American countries do not even reach half-a-way mark of the more than 10 Mbps observed in 2014 in the US market. Slower networks have kept away many potential viewers and hindered the emergence of a solid base of original content creators. In fact, today there’s only one Latin American creator within the top 20 channels with the most subscribers.

Akamai's "Q4 2014 State of the Internet Report"

With the use of live streaming mobile apps such as Persicope and Meerkat, Latin America may leapfrog the Youtube video experience and create a vibrant market for online mobile video. In most Latin markets, 4G networks are being deployed while smartphone adoption is growing rapidly. All of the sudden, everyone with a smartphone has the potential to become a content creator and increasingly mobile audiences now have the infrastructure to enjoy and share this content.

Over the last few weeks, first Meerkat and then Periscope have both gained really good traction with users. Owned by Twitter, Persicope can leverage its parent company’s network of over 60 million users, in the US alone, as a distribution platform for its content. Matching this kind of distribution will be difficult for a rival like Meerkat. However, if Meerkat were to partner with Facebook the picture may flipped completely. Especially in Latin American markets, where WhatsApp, an application owned by Facebook, has over 60% penetration of all active smartphones, more than twice the penetration of Twitter in the US. If a rival like Meerkat uses WhatsApp as a distribution channel, it could currently reach of more than 120 million users in Latam.

Distribution scenario

The challenge would then be to monetize that user base, an issue where Facebook has failed dramatically but an issue that is getting increasing management attention and testing of local adaptations. Part of the solution might be to focus advertising sales on video. For example over 55% of users in Brazil find video ads to be more natural. Given that TV ad spend in Latam markets total over $40 billion dollars, it may seem only a matter of time until some of that spending will shift to videos seen on mobile devices. Live streaming apps may be a good shot to get a piece of this elusive pie.