A balancing act between huge potential and real issues affecting buy-in
There has been a spike in video-on-demand service providers in South Africa over the past few months, however, with broadband costs considered to be among the highest in the world and download speeds that are slower than many global cities – how viable is the video-on demand (VOD) market in Africa?
In the last six months several new VOD players have entered the South African market, some from partnerships with mobile telcos and others through pay-TV offerings. We’ve seen MTN, a South Africa-based multinational mobile telecommunications company operating in 21 countries with over 152 million subscribers, recently launch FrontRow Services, a VOD platform that provides customers with access to movies and television shows for R179/month.
Vidi, launched last year by Times Media Group, a prominent media company, is a streaming subscription service costing R149/month, with movie rentals costing between R15 and R27. Altech’s Node subscription costs R299 and movie rentals cost between R15 and R25. In contrast DStv’s BoxOffice (which has no additional subscription over its monthly satellite TV offering) offers movie rentals. Also popular in South Africa is iTunes which offers a TV on demand service which allows rental and purchase options.
From a digital perspective the African continent is an interesting one where consumers are hungry for content yet the viability of this offering, from both a consumer and provider viewpoint, is faced by a myriad of challenges.
It’s worth looking at the state of broadband in Africa, which is relatively poor. According to global technology research and advisory firm Ovum, South Africa ranks only 103rd out of the 191 countries worldwide tracked by the Broadband Development Index in 2014, and African countries account for eight out of the ten lowest-ranked countries in the Index in 2014. Ovum’s report added that South Africa had a score of 262, Kenya 244, Zimbabwe 241, Uganda 227 and Nigeria 227 out of a high possible score of 1,000.
The biggest and perhaps most obvious challenge is that if data connectivity costs remain high, the supposed advantage of anytime, anywhere connections is lost. That, added to the fact that fixed broadband penetration in South Africa is low, means that the most viable alternative to a market like South Africa – which is largely reflective of the continent – is a provider that allows users to store content after downloading.
In South Africa, with a total population of 54 million, 46% are active internet users and 20.9 million are mobile users – nearly 50% of the market, according to a recent report by global social media agency We Are Social.
It’s a bit of a chicken-and-egg scenario – a major impediment to mass adoption of online VOD services in South Africa is the cost of data connectivity, particularly for mobile broadband, but mobile users have the highest potential for VOD uptake.
The advantage of accessing digital content from anywhere on multiple devices will be lost if the cost of data connectivity remains high. With low fixed broadband penetration, online VOD offering on mobile broadband is where we will see the most grow, based on the large mobile subscriber base.
Fibre-to-the-home (FTTH) services are burgeoning in South Africa, and while these are ideal for VOD, mass roll-out is still a long way off, which brings us back to mobile broadband as the most viable and appealing alternative for mass adoption of online VOD in South Africa.
This also presents a significant opportunity for Red Touch Media Africa (RTMA), which addresses the issue of low broadband penetration through kiosks, web-stores and apps. Consumers no longer need to be online to view their desired form of content, as RTMA allows users to download their content, which they can do in-store kiosks. Alternatively a web link sent via e-mail can also be used to download content which can then be stored and viewed at leisure. Shrewd businesses will leverage this option for their consumers – creating new connection and engagement possibilities.
We are creating options for users who may otherwise not have access to content as a result of high mobile broadband costs. While they may be broadband-poor, consumers are tech-savvy and take to solutions that resonate with them on more than a download level. VOD is by no means something that will always have limited appeal in South Africa, however, with the current broadband situation, the most obvious solution is to meet the challenges heads-on and offer alternatives which evolve as the market does.Contact our Africa Office