There must have been an emergency meeting called in South Africa, home
of Multichoice, which owns pay television service DSTV, when Netflix
announced it was entering Africa's most advanced economy in 2016. By
August, Multichoice's parent firm Naspers had responded with the
launch of its own online video on demand service to rival Netflix, the
international provider of on-demand Internet streaming media with over
26 million subscribers worldwide. The battle will be among Netflix,
ShowMax and other Video-on-Demand (VoDs) in South Africa. Several DSTV
subscribers that are not on the service for sport are already moving
over to on-demand TV service. More will do when Netflix launches.
Apart from cost effectiveness of VoDs, Netflix is expected to pull its
originals off DSTV.
Cost of Subscription
For years, Africans have been held to ransom by DSTV which is by far
the best pay television service on the continent in terms of content.
However, changing consumer behaviour over the past half-decade has
increased demand for better subscription pricing. While some
subscribers call for subscription prices to be slashed, others ask to
pay only for what they use. People almost never watch television shows
when they are broadcast anymore. The television consumer, like every
other consumer, according to 5 African Consumer Trends for 2016, is
tending towards on-demand service. But for lack of a better option,
Africans have continued to subscribe to DSTV. Once Netflix launches in
South Africa, a lot of DSTV subscribers who are on the pay TV service
only for movies will move on.
Netflix launch
When the popular streaming service first announced plans to enter
South Africa earlier this year, its projection was 'within the next
two years', but the company moved earlier than expected, apparently
due to the presence of a ready market itching to get on the service.
Some Africans have even devised means of circumventing Netflix's
geographic restriction to access the service from the continent,
meaning they are ready to pay the current subscription fees charged
anywhere else by Netflix. Now, industry sources, according to
Mybroadband, say the on-demand TV service will launch in South Africa
next month.
A survey by Mybroadbandshows early adopters in South Africa are
willing to pay R124.54 for a monthly Netflix subscription. ShowMax
charges R99 per month for its premium service.
Data challenge
One challenge that has hindered the growth of online streaming in
Africa is cost and quality of data. But the issue of quality is being
addressed already with the advent of LTE internet service providers
offering speed of up to 32mps. Cost is also going down in some parts
of the continent and this is expected to continue with increasing
demand.
According to the International Telecommunications Union (ITU),
broadband is now affordable in 111 countries of the world, with the
cost of a basic (fixed or mobile) broadband plan corresponding to less
than five per cent of Gross National Income (GNI) per capita, thus
meeting the target set by the Broadband Commission for Digital
Development.
Mobile broadband is the most dynamic market segment. In 2015, 69
percent of the global population will be covered by 3G mobile
broadband, up from 45 percent in 2011. The network is also expanding
into rural areas, and ITU estimates that 29 percent of the 3.4 billion
people worldwide living in rural areas will be covered by 3G mobile
broadband by the end of 2015.
ITU estimates that between 2000 and 2015, Internet penetration has
increased to 43 percent of the global population, from 6.5 percent,
with the proportion of households with Internet access at home
advanced from 18 percent in 2005 to 46 per cent in 2015. Although ITU
figures also indicate that four billion people in the developing world
remain offline, significant success has been recorded.
The Future
With lower data cost and changing consumer behaviour driving up demand
for on-demand TV, DSTV and other pay television service providers
alike, will struggle. The saving grace for DSTV is its sports
offering. With the South African pay TV service holding the rights to
air English Premier League among other sports on the continent for
years to come, the arrival of Netflix and increased adoption of other
VoDs on the continent may not hit DSTV just yet. However, what could
be a nail in the coffin of the pay TV service will be the arrival of a
sports online streaming service that allows you pay only for what you
watch. If such comes on, it will be the answer to the undying request
of consumers in Africa; no one will be left behind in its adoption if
data services improve on the continent.
However, Naspers is not caught unawares as its ShowMax has given it a
level playing field to compete with the biggest names in online
streaming. The media group will be hoping whatever it loses in pay TV
can be recovered online.
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