Naspers reacted fast to the news that Netflix was going to roll-out across Africa and has announced its own 36 country expansion outside of South Africa. Russell Southwood spoke to ShowMax's Head of Communications Richard Boorman about how it will take on this big expansion.
ShowMax has expanded its VoD offer to 36 Sub-Saharan African countries and is also offering its Afrikaans offer kykNET to 28 countries (mainly in Europe and the USA) for the Afrikaans diaspora. In terms of priorities, Boorman says it's "phased roll-out" with an initial focus on East Africa and it's "set its eyes on expanding further".
It now claims to have the largest VoD catalogue on the continent:"There's currently somewhere north of 25,000 TV show episodes and movies which is the equivalent of 15,000 hours of viewing. 30-40% comes from within Africa."
Based on South African viewing patterns, the popular content is big movies from Hollywood, HBO content and TV series like Big Bang Theory. In terms of local content, there has been something of a "nostalgia trip" for many who have been watching archived local TV shows aimed at older kids.
ShowMax has been careful not to cannibalise DStv's subscriber base and other than one 30 day free introductory offer, it has not promoted the service to its Pay TV base. The standard free offer is 7 days and it had to remove the free content it initially put on to the platform as it was confusing potential customers.
The sub-Saharan service costs US$ 7.99 per month for unlimited viewing. The service includes a Kiswahili language section and a Nollywood section, as well as an African Film section that pulls together classic movies from across the continent.
So how long will ShowMax take to get to profitability?:"That's not something we disclose. It will not be a quick turnaround but the key to this is scale."
And will ShowMax like Netflix invest in original co-productions?:"We've looked at it and we've got it on our radar. At the moment the focus is on developing the platform and getting all the platforms its on (mobiles, computers, tablets, smart TV) working. We're working hard on our partnerships. For example in South Africa we've been working with Telkom and have had vouchers for the service on sale in 700 of its retail outlets."
According to Boorman, the three big challenges it faces in the Sub-Saharan countries it wants to roll-out in are: teaching people what Internet TV is; the cost of data; and seamless content delivery.
What ShowMax is calling Internet TV is know in the business either as Video on Demand (VoD) or Subscription Video on Demand (SVoD). Although having so much content at your fingertips whenever you want it is amazing, it takes a while to work where the things you like are. Plus devices change habits. For example, watching a movie on a tablet can be every bit as satisfying as watching it on a TV screen. But technology changes fast but behavior changes walk more slowly.
The cost of data is an issue even in ShowMax's core African middle class markets. So it has enabled downloads of 25 episodes for up to 30 days on iOS and Android smartphones and tablets. In addition, it has three user selected settings for both streaming and downloads as well as a user selected data cap. So it's working hard to ameliorate the current not very sympathetic data regimes found in most countries. It will also be seeking to partner with ISPs offering Fibre-To-The-Home.
To ensure seamless content delivery, it has been testing the service in key locations and ensuring that it has optimized the network as much as is possible. It has sought to get the content as close to those it's delivering to as possible.
The race is now on at the top end of the African VoD market between Netflix, Showmax and MTN's Vu. It will be interesting to see how each of them tackles the three challenges Showmax has identified.