Homegrown video platform Zoopy is positioning itself to take advantage of the burgeoning mobile video market but it’s a risky gambit, says a telecoms analyst, and one that will have to be navigated carefully.
Zoopy has often been referred to as South Africa’s answer to YouTube, but Zoopy CEO Jason Elk told the Mail & Guardian that this was never a label the company chose for itself and, in fact, has battled to shed the label. In 2008, Zoopy attracted the interest of cellphone giant Vodacom. Over the years, Vodacom has incrementally increased its stake in Zoopy and by last year had bought out the platform entirely. Vodacom is making a concerted push into data services and last week announced that its data revenue in South Africa has grown to R1,7-billion.
Last week Zoopy announced that it would no longer be hosting user-generated content and would instead focus on producing and showcasing its self-produced content. Zoopy has always had a component of self-produced content, known as Zoopy TV, alongside user-generated content on its website.
According to Elk, the company found that towards the end of last year users were gravitating more towards Zoopy TV than the user-generated content side of the business. At that point, the most popular videos on Zoopy were those that dealt with news, sports and entertainment.
Because of this, the new Zoopy has a distinct infotainment bent. Zoopy now offers “bite-sized videos of the latest news, sports and entertainment” all made specifically for mobile.
‘Different people, different expectations’
Ultimately, the move towards the “new Zoopy” was about creating more focus for the platform, he said. “For the last three years we’ve been running two core businesses within Zoopy — user-generated content on the one side, and self-produced Zoopy TV shows on the other. Both were targeting different people with different expectations and we didn’t have the resources to build both businesses to maximum effect into the future. So we focused on one: self-produced content. This makes the most sense in terms of monetisation and in terms of popularity,” he said.
Arthur Goldstuck, managing director of the telecoms research firm World Wide Worx, believes Zoopy’s move is probably a good one, but “the question is whether it’s too soon”, he said.
Mobile internet is taking off in a big way internationally but South African consumers still lag behind their international counterparts.
Elk maintains that Zoopy’s potential target market is huge. “There are 20-million users in South Africa with web-enabled phones. This is a lot larger than the two-million computer-based internet users, and they are permanently connected, both to their handsets and to the web,” he said.
Goldstuck points out that this is a “classic misrepresentation of the market” and that the picture is not so simple. “We estimate that about six million people in South Africa are using the web on their phones right now,” said. However, he added, that this number is “growing fast”.
Shift to video
“As the primary form of access, more people are shifting to mobile,” said Goldstuck, adding that “the shift to video is one of the big shifts in media”.
“It looks like Zoopy is positioning itself for the future, rather than for what the market is doing right now. This is definitely a play for the near future, not for right now,” he said.
Goldstuck said he believes the challenge for Zoopy would be one of timing. “It all depends how far ahead of the curve they’re going to be. Their timing has to be very fine,” he said
If the company invests too much too soon, it could find that the revenue gap is too big and that it is burning through available funds, he said, warning that Zoopy would have to be careful about investing too much to justify the investment.
He added that Zoopy’s gambit depends very much on monetisation. “If they’re able to sell advertising off the back of [their self-produced content], and hosting corporate videos, then it’s a viable business model. But everything depends on how much revenue they’re generating,” said Goldstuck.
Elk said Zoopy was looking at a number of ways to monetise Zoopy, including selling branded entertainment, sponsorships and channel integration as well as display banners for the web, mobi site and iPhone and BlackBerry apps.
After less than a week it’s hard to say how well the new format is working for Zoopy but Elk believes that mobile video will be both affordable and desirable for users.
“Mobile costs range from 18c to 80c per megabyte with the average settling around 30c. So if an average video of ours is two to three megabytes, they’ll be spending less than R1 on average to view a video,” he said. “As data costs continue to become more competitive, this will obviously become even more affordable for even more users.”