Africa is a region where many satellite operators believe there are strong opportunities for growth, particularly in terms of the broadcast sector where pay-TV penetration levels are still low. Recently, Frost & Sullivan put out its “Digital Media — Pay TV and VOD in Africa” report, which gave a comprehensive update on the state of pay-TV markets across the region.
Deepti Dhinakaran, Information and Communication Technologies (ICT) research analyst at Frost & Sullivan, says that despite MultiChoice’s DStv dominance, South Africa has the most developed pay-TV market, whereas triple-play services are more developed in Kenya.
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“Owing to slow internet download speeds and the high cost of access for video streaming, pay-TV and VOD services are still not mutually exclusive, but complementary in Africa,” she explains. “Partnerships between telecommunications providers, infrastructure providers, and VOD providers are helping subscribers to access content with zero-data costs while increasing traction for telecommunications providers.”
OTT
Dhinakaran believes the Over-the-Top (OTT) market, particularly in South Africa, could be one to watch over the next year. When looking at OTT, Vicky Myburgh, partner/director at PriceWaterhouseCoopers Africa, says there is strong growth potential in the VOD sector, but large international players just entering the market are lacking local content.
“Broadband penetration was just 14 percent in South Africa in 2015 and is set to reach only 24 percent of households by 2020,” she says. “Significant investment in infrastructure will be required if online TV services are to gain significant uptake in the long term.”
DTH
While the threat to Direct to Home (DTH) from OTT services such as Netflix is still in its infancy, satellite pay-TV still faces other forms of competition, notably from Digital Terrestrial Television (DTT). Dhinakaran believes that while DTH will continue to remain the dominant pay-TV service, with more than 75 percent market share across Africa, its services are currently not affordable for the majority of the population.
Zuku
Jay Chudasama, CEO of Zuku TV, still believes the potential market for DTH is “massive.”
“Millions more households will be created from the population boom, and all of these households will become TV households. The DTH market is still very much in the growth phase, and this growth phase will continue at least for the next 10 years,” he says.
Millennials
One of the big challenges facing any pay-TV operator is attracting the younger generation of user to pay to access content. In Africa, this is a particularly interesting challenge. Myburgh says with mobile remaining the most popular way of accessing the internet in South Africa, penetration is forecast to rise from 45 percent to 72 percent over the next few years.
“Today’s youth are very comfortable with digital consumption of content and they are also used to staying connected for most of their day. They have the time and resources to consume entertainment and media content,” she says.
Digital Migration
Chudasama believes the key change has been “digital migration.” He believes this has initiated a different thought process and has allowed people to have a greater variety of channels than what they could access with only analog. VS
