22 May 2018

Africa: Streaming Services, Innovation Stir Competition in Pay-TV Market

analysis

Pay-TV firm MultiChoice, which operates DStv and GOtv, lost more than 100,000 premium subscribers in 2017, due to what it terms unregulated competition from streaming services and over-the-top platforms, such as Netflix and Amazon.

In its submissions to the Independent Communications Authority of South Africa (Icasa), which is conducting an enquiry into subscription TV broadcasting services, the firm admitted that streaming services have eaten into its market, further shrinking its revenue.

Last year, a confidential report showed that the firm had lost more than 300,000 subscribers since 2014, to the new players.

Netflix, which was launched in 2016, has gained more ground, thanks to better Internet connections on the continent as well as its pricing model. Netflix's premium subscription goes for $10 while the same package on DStv goes for $79.

Last month, Netflix announced it gained 7.41 million subscribers during the first quarter of this year, pushing up its global subscriber base to 125 million and pocketing $3.6 billion in revenue.

The American firm, which is estimated to have more than 500, 000 subscribers in Africa, saw a 25 per cent increase in average paid streaming memberships. It is currently the world's 10th-largest Internet company by revenue.

Lost market

As it tries to recapture its lost market, MultiChoice early this month said that it was developing a streaming-only version of the DStv service, which will start in the South African market.

"We have taken steps towards offering a streaming-only package. However, there were obstacles, which included securing the streaming rights for all the entertainment content we offer on our existing DStv packages.

"So far, we have been able to secure these rights allowing our online app, DStv Now, to offer live streaming of every channel included in the DStv Premium package," said MultiChoice South Africa chief executive officer Calvo Mawela.

DStv Now is an application accessed through either Android, iOS or via a web browser, which allows subscribers to view content online.

The Johannesburg-based firm always experiments with its South African market its new products before rolling them out to other African markets.

It has been argued that the only revenue stream that is keeping MultiChoice afloat is from its local sports broadcasting rights.

In September 2016, Naspers, which owns DStv and Showmax, announced that its South African market would now access Showmax subscription at no additional cost if they are subscribing to their premium package.

"The future of TV and entertainment generally will all converge online through either Video on demand or video streaming services. This is why we are seeing the traditional pay-tv providers tagging along their streaming affiliates and bundling them into large bundle," Naspers said.

Internet availability

The availability of faster and reliable Internet has seen the rise of on the market providers like Netflix, Hulu, Iflix and Showmax, who are now eating into the lifestyle and entertainment cost that other pay-tv providers would ordinarily bundle together with their sports provisions.

This competition has also extended to satellite TV where DStv has been the dominant force for years, with services offered by Chinese media giants like StarTimes and Kwese proving worthy alternatives, especially for the low end market.

Last year, Kwese launched an Over the Top (OTT) service in partnership with telecom companies in South Africa, and has already made these services available across its African operations as it also seeks to get a share of the streaming market.

Kwese Play is a streaming service that offers Netflix, YouTube and other channels on-demand.

"As it is, we already have agreements with mobile network operators across the continent including Safaricom, Vodafone and MTN. Through their networks, we will avail these services where clients will also be able to access our boxers from these telecommunication firms' shops," Neo Lekgabo, chief marketing officer at Econet Media said.

New product

In July last year, Kwese announced a new product in the region that allows its customers to budget around particular timelines, and events like big matches and top sporting calendar activities to access the content they need.

Kwese says its customers could pay for three-day, seven-day or 30-day passes for its premium content, with the lowest priced package costing $4.75.

The firm, which also now boasts the World Cup hosting rights set to start in June is hoping that this form of product packaging will work for it in the monthlong football bonanza in Russia from June 14 to July 15.

Kwese Free Sports has signed an agreement with Nation Media Group to broadcast 32 matches of the world's premier sports event live on NTV.

This was billed as an innovative way to navigate the changing television market that has seen new streaming entrants like Netflix and South African headquartered Showmax, an affiliate of Multichoice capture the Kenyan online television market.

Iflix is the latest Video on Demand service to come to Kenya. It is installed in android boxes and even Amazon sticks, from where users can access these channels through its tidy-easy-to-use manner.

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