[Satellite News 01-23-09] IPTV Americas (IPTVA) searching for outside investment as it looks to go to the next level of its growth strategy, CEO Alvaro Gazzolo told Satellite News.
    “We will need further funding going forward. Unfortunately, the financial crisis hit right in the middle of our private placement for financing,” said Gazzolo. “We needed the money for expansion, and taking the company to the next level. Today, we are looking for capital partners so we can take the company to the next level. What I mean by that is, is to expand the head-end, have multiple other feeds, and become a key player in Latin America for the small and medium size operators.”
    IPTVA, a satellite-based IPTV solutions provider, signed a deal earlier this month with SES New Skies. SES New Skies host IPTV Americas on its NSS-806 satellite, enabling IPTVA to offer an end-to-end satellite-delivered IPTV distribution solution to all telecoms and cable operators’ head-ends in Latin America and the Caribbean.
    Dolores Martos, vice president of sales for Latin America and Caribbean at SES New Skies, discussed the distribution deal. “The satellite signal will allow CATV operators to use their existing infrastructure to bring the MPEG-4 encrypted content to their analog head-end and become digital operators by means of a small capital investment,” she said.
    For IPTVA, the road to profitability may not be an easy one. The company’s success is dependent on how many deals it can finalize with small telcos and cable players within Latin America and the Caribbean. Gazzolo said that for this strategy, it has an advantage over competitors. “We don’t spend as much money. We are lean and intelligent in how we invest money. I have spent a fraction of what SES or Avail did in the U.S. We need around 40-50 deals with small cable players/telcos to become profitable. Right now, we are on track to close 30 deals this year. So, we hope to be profitable by 2010,” he said.
    Gazzolo’s company may be able to do more deals with cable players first, rather than telcos. “The cable companies are much more flexible to deal with than the telcos and they know the meaning of time to market,” said Gazzolo. “Telcos are not going to make any commitment to pay-TV unless their bottom line is affected. Telefonica in Chile started an IPTV trial in 2003. It was only in 2005 that they made a serious commitment with their deployment of a platform in 2006-7. They did this because the cable company in Chile stole the top 300,000 subscribers from Telefonica in Chile, via a triple play offering. Only then, were they able to react.”
    Gazzolo said the situation is the same in other markets as well, motivating IPTVA to enter the IP cable market with a service launched in 2008. “We cannot wait for the telcos. We have developed a solution for IP cable. We have already signed agreements. We have signed several cable operators in markets such as Nicaragua, Costa Rica and the Dominican Republic. We are proving that the system works,” said Gazzolo.
    The size of IPTVA’s prize market is more than substantial. There are 100 million TV households in Latin America, 23 million of which use pay-TV services, said Gazzolo, who understands the numbers involved. “DTH has around 4-5 million pay-TV households, and cable has around 18+ million subscribers. From those 18+ million subscribers, I would say about 80 percent of those are analogue subscribers. So, we are talking about 15 million analogue subscribers. Our market is the small cable operators which have 3-5 million subscribers. Then we have the small telcos, which is a very good add on, and that could be another two million subscribers. So, our total universe is around seven million subscribers,” he said.
    Gazzolo believes smaller operators have no choice but to offer IPTV services if they want to succeed against the current industry giants in the region. “Telefonica and Telmex have both gone on a shopping spree in recent years in Latin America,” he said. “The cable companies that are left have looked to have a pessimistic future. They either have to invest to upgrade their network, or they will die. Telefonica and Telmex also have an advantage when acquiring content. For smaller operators, they are faced with stark choices. We are helping these operators.”
    IPTVA aims to provide the smaller operators with a solution to upgrade their entire network for IPTV in a price range between $30,000 and $40,000, Gazzolo said, adding that the low cost puts his company in the right position at the right time. “Our role is to get all the small operators under one umbrella. They will benefit from our solution. The content providers also don’t want the smaller operators to go away,” he said.
    Expanding beyond the Latin American region would place Gazzolo’s eyes on an even more massive potential market – The United States. But, with SES Americom’s recent announcement that it was closing down its satellite based IPTV service, IP Prime, later this year, it could prove a tough market to crack.
     “In the U.S., you have a greater proliferation of HD services for example,” said Gazzolo. “When SES developed their satellite head-end, they had to spend huge amounts of dollars. I don’t know how much money they were burning, but I guess it was a lot. It was impossible to make the numbers work. We have a different reality to IP Prime. We provide a hybrid solution to Latin America. We use SES infrastructure to support our system. We take advantage of the big infrastructure they have.”