Internet Video

Latino Providers Strike Up the Broadband

3/30/2007 8:00 PM Eastern

The supply of Latino broadband programming is about to build up, thanks in part to a growing number of entrepreneurs, including some high-profile dot-com veterans.

“We are at the very beginning on many levels,” said Horowitz & Associates vice president of marketing and business development Adriana Waterston. “I think, in terms of video, this is in its infancy.”

The broadband-penetration rate among Hispanics is at 30%, according to an early March report from Horowitz. Two weeks later, the Pew Hispanic Center and Pew Internet Project, using a different methodology, reported the slightly lower figure of 29% of Hispanic adults with broadband connections at home.

The Horowitz and Pew findings detail stark differences in Internet use within the Hispanic market, divided along the usual fault lines of language and nativity. Only 32% of Spanish-speaking Hispanic immigrants use the Internet, compared to 76% of bilingual Hispanics and 80% of second-generation Latinos, according to the Pew report. Waterston is confident there will be significant growth in Hispanic broadband adoption rates over the next couple of years.

She is not alone. Matías Perel, CEO of the U.S. Hispanic and Latin American interactive-marketing firm LatinThre3, said he receives calls on a weekly basis from investors looking to fund Latino broadband startups.

“There is a lot of money looking to invest in this area,” said Perel. The surge in Latino broadband sites consists of firms funded with venture capital and bootstrap startups.

One of those is MiLatino.com. Marine Corps Reserve Maj. Winston Ramirez last July started MiLatino, which bills itself as “Latino Internet Television;” it now has some 80,000 unique visitors a month. The focus is on reaching bilingual Latinos and most of its videos are in English. There are about 100 video clips in various categories.

Ramirez expects the operation will break even on a cash-flow basis this month or next. He and a partner have invested less than $100,000 to date. Ramirez believes traffic and competition will soar this year and next.

“Our business plan takes into consideration rabid competition coming on board near the end of [this] year,” said Ramirez. “We've seen a few other companies getting it and say[ing], 'Aha!' ”

Fernando Espuelas' “aha” moment led him to abandon the idea of a cable network for young Latinos in October, 2006. Instead, he focused his energies on VoyTV.com.

“As we were getting ready to really resolve some of the outstanding issues, we started to feel the landscape shifting around us and realized that kind of deal would be very restraining for us, relative to what was going on at the consumer level, which was a rapid acceleration of broadband adoption,” he said.

According to Horowitz, 47% of bilingual Hispanic Internet users have broadband access. Espuelas believes young bicultural Latinos are looking for “culturally relevant programming.”

Espuelas, a veteran of the U.S. Hispanic and Latin American incarnations of the dot-com boom, founded Spanish-language Web portal Starmedia in 1995, which at one point had a market capitalization of over $4 billion.

As part of the dot-com bust, StarMedia's stock-market value crashed. The U.S. Securities & Exchange Commission has sued Espuelas and former employees in a New York federal court, alleging a number of securities violations. The company filed for bankruptcy in December, 2003.

VoyTV.com has thousands of videos and a segment called “Voyeur,” which highlights the best (or, depending on your age and viewpoint, the worst) clips posted by users. A recent episode featured footage of a paintball shot point blank at someone's skull.

“There is a big component that is driven by the fun stuff,” said Espuelas. “[Consumers] are creating [content] not based on some sort of cookie-cutter pattern of 'this is Latino, this is not Latino,' but rather on the premise, I believe, of if it is interesting to you and you are Latino then it is Latino content.”

Michele Ruiz is motivated, in part, by doing more than just the “fun stuff.” The former Los Angeles TV reporter and anchorwoman started SaberHacer (which roughly translates as “To Know”), a broadband how-to site featuring English- and Spanish-language videos on topics such as avoiding identity theft and creating a “secure password.”

“At the core, SaberHacer is about empowerment,” said Ruiz. “It is about giving Latinos information and access to experts that perhaps they wouldn't otherwise be able to reach.”

Ruiz intends to make money by selling advertising on the site and by selling what she described as “comprehensive, expert-based DVD guides.”

Currently for sale on her site is a two-DVD set, “Guide to Computer Basics,” that costs $39.90. Ruiz won't identify her investors or disclose sales figures, but said, “it is going to take a lot of capital to make it a viable, valuable, and financially successful media platform. It is beyond what most people would have the ability to capitalize on their own.”

No one told that to Gabriel Torres. In spring 2005, he spent $3,000 to start production on syndicated TV show RemixTV, which airs on five LAT-TV affiliates, as well as KDVA-TV, Telemundo's El Paso, Texas affiliate.

“I think the most important thing is that anyone can do this,” said Torres. “Things are affordable now.”

RemixTV has only secured local advertising in El Paso.

That didn't stop the Greenspun Media Group, which owns a string of Nevada newspapers, from purchasing the show primarily for its broadband potential.

“The television show came along with it; it was like an extra,” said RemixTV executive producer Michelle Booth. “For a long time they didn't grasp the fact that we were a television show and they thought we were a broadband channel. … They wanted us mostly for the Web site, for broadband.”

Industry-wide interest in multicultural broadband programming is a fairly recent affair.

“Two years ago, when we used to talk to some of the producers, they didn't even want to talk to us. They didn't think much of it,” said Burhan Fatah CEO of multicultural broadband programmer Sivoo. “Today, there is nobody, literally, that is downplaying this marketplace.”

Sivoo, which makes existing broadcast programming available to broadband users at no charge, streams several telenovelas from Argentina, each of which lasts approximately 50 minutes and includes commercials.

“The completion [rate] of these novelas is mind-boggling,” said Fatah. “It is almost 90%.”

Sivoo is building a sales team and intends to support itself primarily with advertising.

The challenge is that so does everyone else in the sector.

IPTVLatino chairman and CEO Greg Keough is in a position to compare the current interest in Latino broadband content to the dot-com boom. Keough founded financial portal ZonaFinanciera.com (Financial Zone), for which he raised $40 million.

“I think the social-networking part of the market is very frothy,” Keough said. “YouTube had $15 million in sales and was bought for $1.5 billion that sounds pretty goddamned frothy to me.”

But Keough stresses his is a viable business model. He said he hopes to capitalize on relations with existing Latin American content companies that have a limited U.S. presence.

Espuelas insisted, “Advertisers see this as an important and critical place to reach customers.” He pointed to a just-inked $350,000 advertising deal from a major telecommunications provider who simply walked in the door. No one from Espuelas's sales team had previously contacted the buyer.

A $350,000 buy is small change compared to time purchased during upfronts on Spanish-language broadcast networks.

Furthermore, in the U.S. Spanish-language market, two of the largest Internet portals are related to its biggest broadcast-TV players: Univision.com and Yahoo!Telemundo.

Nonetheless, LatinThre3's Perel believes there is plenty of room for competition: “For me, it is always wide open,” he said.

March
April