Business of movies reinvented in SA
When you invoke Julius Caesar in your branding, you’re not planning a quiet market entry. The new online video-on-demand service VIDI has successfully transitioned from “Veni” (I came) to “Vidi” (I saw). It must now survive long enough for the “Vici” (I conquered).
It certainly made a forceful arrival, with owners Times Media announcing an unlimited movie streaming service for R149 a month, movie rentals from R15 for older films to R27 for recently off-circuit content, and a 30-day free trial for any South African user.
There is little doubt that VIDI was designed to fight a war on two fronts: on the one side, it is facing the satellite television players, in particular DStv; on the other, the imminent arrival of Netflix, the American market leader in streaming media on demand, along with DStv’s online service.
To put the foreign threat in context, Netflix is now available in more than 40 countries, and is used illegally by thousands of South Africans. All it takes is an $8.99 a month for a Netflix subscription and the ability to mask one’s computer address through an IP address masking service. Most local Netflix users rely on a virtual private network (VPN), which allows them to log onto international services via a computer in the host country.
While they are paying for the service, and therefore seemingly accessing it legitimately, copyright laws that apply to regional rights limit their legal right to viewing much of the content in this way.
There are formal services in South Africa that offer bypassing of these restrictions, such as a service from Internet service provider Axxess, called “Global Axxess”, a package that explicitly offers to unblock US regional restrictions. However, this still does not legitimise the access, although it does simplify address masking, increasing the appeal of the R100 a month equivalent cost of Netflix.
Amazon Prime Instant Video, an equivalent service from Amazon.com, costs $99 a month, working out to almost exactly the same price as Netflix.
The clear advantage of both Netflix and Amazon Prime is their massive movie and video libraries. Each offers tens of thousands of movies and TV episodes, while VIDI is launching with only 100 movies and 1 000 TV episodes. It is this content power that Times Media is aiming to pre-empt by steadily building up its library ahead of any international invasion.
“The biggest barrier to entry is the cost of content,” explained Andrew Bonamour, CEO of Times Media, at the launch on Wednesday. “There is tremendous competition for content, and we will add more titles all the time.”
It is expected that the content offering will double within a month, and keep growing by about 100 movies a month.
Initially, it won’t appear to offer serious competition to DStv’s video-on-demand service, BoxOffice. However, the latter is constrained by the capacity of the DStv decoders. The older standard decoders can accommodate only 15 movies at a time, with a total of 150 movies on offer over the course of a year. The newer high definition Explora decoder holds 20 movies.
On the other hand, through the web-based service BoxOffice Online, subscribers get access to a slightly wider range of new release movies as well as a large library of classic movies. In what is probably not coincidence, new release movies on BoxOffice online also cost R27 to rent. On the decoder, the cost is R25 – for an experience that , on the Explora, is vastly superior to anything offered online. The similarity in pricing probably has more to do with the cost of licensing the content than with competition.
Even Netflix finds its service bedeviled by the cost and rights of content, and constantly trims its older content to make it more viable to bring newer movies online.
It is likely that, as the VIDI service grows, it will compel DStv to further expand its lineup, and possibly also offer an unlimited or “all-you-can-eat” package.
And these won’t be the last new entrants into the local movie entertainment market. Movie watching is steadily migrating from the cinema to the home. The trend prompted Times Media to sell the Nu Metro chain and its 17 cinema complexes earlier this year. As the VIDI launch shows, it wasn’t getting out of movies, but merely changing sides in how movies are consumed.
As with Netflix and Amazon prime, VIDI uses a technology called adaptive streaming, which detects speed and quality of connections and automatically adjusts the quality of the video accordingly. So the same user with the same device – computer, tablet or smartphone – could watch a grainy image from one location, and get it in full high-definition from another. No more than a 1Mbps line is needed to get the basic experience.
The good news for consumers is that this is merely the beginning of the movie revolution in South Africa. Several more players are waiting in the wings, ready to deliver movies and television shows via satellite, online and even on smartphones. Early movers always have an advantage, but better technology and bigger content selection will usually win the day.
That is certainly the hope of VIDI, which would itself love to be able to invoke a line from the movies, namely the memorable words of Peter Venkman, Bill Murray’s character in Ghostbusters: “We came. We saw. We kicked its ass.”