Building a pay-TV business in Africa is far from easy, despite a greater demand for video content. The continent has a population of more than 1.1 billion people, and they want more video — this is the good news. Finding content propositions that strike a chord with households/users is the challenge, but one many are looking to embrace.
MultiChoice remains a standard bearer in the market. It has 8 million Direct-to-Home (DTH) subscribers and 2.2 Digital Terrestrial Television (DTT) subscribers across Africa. Gerdus Van Eeden, CEO, Broadcast Technology at MultiChoice, admits the operator is not growing heavily in terms of satellite capacity usage. He says the company is seeing moderate growth, and this is really coming from the launch of new High Definition (HD) channels. “But, it is not the growth we have seen over the last 10 to15 years. We now invest heavily in protection (back-up capacity) as well. That is why we essentially are getting Intelsat to put another satellite up. So, it is a combination of moderate need, as well as protection,” he says.
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However, despite a growing DTT offering, Van Eeden expects satellite will continue to be important over the next decade, while admitting MultiChoice will adopt more of an Over-the-Top (OTT) approach going forward. “We have large outlying areas of geography, and yes, in the biggest metros, people might migrate to other means of delivery but we still have large market segments that will take a long time to be properly served by Internet,” he says. “That is why we now invest in more capacity, and back-up protection. The fact we still invest a lot in satellite is telling.”
MultiChoice uses Intelsat for Southern Africa and Eutelsat for the rest of sub-Saharan Africa. In the case of Intelsat, it actually expects a collocated satellite — IS-36 — to join IS-20 so it has in-orbit protection. Van Eeden says the operator is investing a lot in recovery options should the worst happen. This gives the pay-TV operator a lot more options in terms of capacity. In terms of Eutelsat 36, it has an in-orbit protection but E36A is quite close to end of life and will be replaced by E36C, which brings MultiChoice more capacity and better in-orbit protection. “Both those satellites launch in the next 18 months, so we are investing heavily in satellite capacity,” says Van Eeden.
In terms of trends in the market, Van Eeden says there has been a large appetite for Video on Demand (VOD) consumption in Africa. MultiChoice is finding ways to give people VOD services in Africa despite the lack of network infrastructure. “I am not saying ‘live’ is dead, but the take-up of VOD is strong. We always speak about the weak networks in Africa, but they are improving. For the people that have that quality Internet service, they are adopting online VOD. Our OTT product also offers live TV channels and VOD channels in one app. The take-up is good if a little limited. Mobile consumption is growing. But, I think that is a trend throughout the world,” he says.
Van Eeden admits that, with mobile and Internet penetration on the up, the market has the potential to change very quickly. He says with linear services being provided by DTT providers, the question will be how will pay-TV operators compete. “Potentially, there will be a proliferation of STBs. Secondly, DTT is free compared to a DTH service. It is going to be interesting to see who wins that linear war,” he says. “DTT could be a game changer and a threat to pay-TV. It also allows OTT to come into the market and take marketshare. We have a platform bubble in terms of VOD. There has to be significant consolidation in the market. I think then VOD will emerge as a significant threat to linear businesses.”
On Digital Media
MultiChoice has long held a dominant position in the market, but others such as the Wananchi Group and On Digital Media (ODM) have also been trying to build successful pay-TV businesses based on satellite. On Digital Media, the owners of the StarSat platform (formerly TopTV) tried to start a satellite pay-TV business but found the going tough. Two years ago, the pay-TV operator found itself in trouble and needed investment. This process eventually saw Startimes from China come onboard with the aim of building a much stronger pay-TV operation going forward.
Eddie Mbalo, director of strategy at ODM is optimistic for the platform’s future. “I think bringing in Startimes Group from China, which already operates in the rest of the continent around DTT, will assist in creating scale for ODM,” he says. “The problem it is the same price for content whether you broadcast to 100,000 people or one million people. So, we think Startimes is bringing scale. They are a technology company also.”
In terms of the capacity it uses, Mbalo says thanks to its relationship with Startimes, it has upgraded up to eight transponders. “The relationship with Startimes is also going to play a key role in taking DTT to some of the most rural parts of Africa. But, there will be a need for satellite. Satellite will have to play a role alongside other technologies,” he says.
Markets Outside of South Africa
While South Africa remains a key target market for pay-TV in the region, attacking markets in sub-Saharan Africa and other markets across the region remains a priority. PwC highlights five territories that will enjoy double-digit growth rates in terms of subscription-TV households by 2019: Greece, Saudi Arabia, Kenya, Indonesia, and Thailand.VS
