Internet, Satellite television jostle for African market

By Penda Jonas Hashoongo
July 2016
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IN an era where satellite television is perched atop its throne as the primary source of entertainment in most households in Southern Africa, a new entrant has entered the market, looking to revolutionise the way people consume television products.
 The new entrant, more affectionately known as Internet Television or Video Streaming Service (VSS), has brought an added and new dimension to the industry but allowing viewers to access content that they wish to watch at the convenience of when they want to watch it.

The surge of internet television in Southern Africa, led by the brands of Netflix and ShowMax, has been such that the continental satellite television giants Multichoice, have now altered the format of their contemporary products in an apparent move to match the convenience being offered by its internet television adversaries.
 As a measure to curb the dominance of the Products such as CatchUp and Box Office, while not presenting themselves as cost-efficient to all DSTV subscribers, offer an interesting edge to conventional satellite television products and provide significant value to the offering of Multichoice’s DSTV product.

In an exclusive interview with Prime Focus Magazine, ShowMax’s head of Communications, Richard Boorman explained that his company’s decision to venture into the African market, including an initial launch in South Africa, was pillared more on the need to expand its accessibility than the sole allure of profitability.

“With respect to profitability in South Africa, it’s fair to say that it takes a number of years to see any returns on this type of investment. One thing that’s clear is that the concept of internet TV is generating a considerable amount of interest in South Africa and I think we’ve managed to establish ShowMax as one of the two major services available in the country. The reception in South Africa hasn’t really had an impact on our expansion plans, though. Our intention from the beginning was always that we’d be looking at a much wider geographic footprint,” Boorman explained.

Despite the palpable growth in popularity of internet television in the African market, Boorman posits that entrance into this market is not without its challenges, with specific reference to the lack of adequate internet connectivity infrastructure.

“The cost and quality of internet connectivity is the single biggest obstacle to the take up of internet TV in Africa. Having said that, we know there’s massive investment going into both fibre connectivity and rolling out mobile coverage. On top of that, we’re seeing more WiFi hotspots in places like restaurants and cafes.

Our view is that there is no question that internet TV will ultimately take off, and given that, we want to make sure we’re prepared,” Boorman says, while adding, “what we have done, however, is introduce some features specifically geared to the connectivity challenge. First, all of our apps have bandwidth capping functionality that allows the user to select the quality of their video stream. The three settings are 300 MB per hour, 700 MB per hour, and uncapped. Second, we’ve introduced the ability to download up to 25 TV shows and movies to smartphones and tablets. Again, the user is able to select from one of four different quality levels for these downloads. The beauty of being able to download and then watch offline is that if you have connectivity at some point during the day (e.g. a coffee shop), then you can download the content for watching when you get home. It’s also great for commuting and for long journeys where you want to keep the kids entertained.”

While profit margins and subscription data point to an overwhelming stranglehold on the African market by satellite television, the advent of high speed internet from service providers such as MTC and Telecom Namibia, in Namibia’s case, has positioned VSS as a genuine contender for the African television entertainment market once the infrastructure challenge has been addressed.

In the meantime, the escalating costs of satellite television, which can go as high as N$1000 in monthly subscriptions, may cut into the profit margins of companies like Multichoice Africa, with a significant portion of this market expected to make a gradual migration to the cheaper (less than N$200 per month) Video Streaming Services.

“We think that adapting our service to the specific needs in Africa is what sets us apart from others - both in terms of functionality and in terms of the content itself, which is why we have such an extensive collection of local content,” Boorman concluded.