Competition breaks TV hegemony

Things used to be simple – a life with MultiChoice or a life without it.

But South African television viewers will soon be spoilt for choice – even if some options are more appealing than others, and some a lot more expensive than others.

The latest arrival will be the United States company, Netflix. It announced last week that it will launch in the country within the next two years.

The binge watchers of TV series were probably salivating at the thought (well, those who pay for content and don’t pirate it), because Netflix has thousands of series and movies for a monthly fee.

Besides its library series and movie catalogue, Netflix said it would roll out about 20 new TV shows a year, including hits such as House of Cards and Orange is the New Black.

The market is becoming a lot more competitive for MultiChoice and other pay-TV and video-on-demand operators.

But as it is difficult to know exactly what you are getting for your hard-earned cash, the Mail & Guardian has summed up the state of the television market in South Africa.

Netflix’s presence on our screens is part of its global expansion strategy. By the end of 2016, viewers will be able to watch Netflix on their PlayStation, Wii, Xbox, PC, Mac, mobile and tablet.

According to the Netflix website, there are thousands of movies and television episodes that can be streamed, with no commercials. You can pause, rewind, fast-forward or watch them as often as you like.

The minimum required internet connection speed to use its streaming service is 0.5 megabits per second, but it states that viewers may want a faster connection for improved video quality.

“Netflix streams a little bit of data as a buffer each time you start a movie or TV show,” according to its website.

Consumer sites rate its streaming service highly, and point out how well Netflix’s buffering system maintains image quality, even on slower internet speeds.

There are some eager viewers who have used technical trickery to bypass their geographic location and subscribe to Netflix. They use a subscription to a virtual private network to get access.

Netflix has said it plans to end “geoblocking” as soon as possible, and has issued its global content release dates. It will sign content deals globally so that it can release the same show at the same time around the world. It is accessible in about 50 countries, but is targeting another 150 in the next two years.

Netflix has been shooting the lights out when it comes to its financial results. Total revenue for the fourth quarter of 2014 came in at $1.483-billion, in line with estimates of $1.48-billion, and more than the $962-million reported for the same period the previous year.

According to the company’s shareholder letter, Netflix added 13-million new members in 2014, compared with 11.1-million in 2013, bringing the global total to 57.4-million members.

By comparison, MultiChoice announced in September last year that it had increased its DStv subscribers to 8.4-million households on the continent and recorded an 18% year-on-year growth, with revenue of R20.2-billion.

Pay-TV benefited from a 16% increase in DStv subscribers year on year, with a 5% increase in subscription rates in South Africa.

Market competition
In May last year, Netflix announced it was increasing its subscription rates for new members, but was locking existing members into their current membership for two years, rewarding them for being early adopters.

It was the first price increase that the streaming service had seen since its launch in 2011.

In the United States, the basic streaming plan costs $8.99 (R103) a month and, in the United Kingdom, it costs £6.99 (R120).

For South Africans, it will give series and drama fans a far cheaper alternative to the R665 for DStv’s Premium package, or R295 for DStv’s Compact.

The satellite competitor, StarSat, which used to be called TopTV, has packages ranging from R99 to R199, which gives viewers between 42 and 78 channels.

Then there is the sister company, Platco Digital, with its OpenView HD platform, where, for the cost of a dish and a decoder, viewers get free access to 18 channels.

But none of these options offers video on demand, which is where the future of television and film is heading.

The launch of Netflix in South Africa will probably bring much-needed competition to the market.

There is likely to be some fallout for MultiChoice, because several popular shows produced by Netflix, such as House of Cards and Orange Is the New Black, are being screened on M-Net. Netflix invested hundreds of millions of dollars in House of Cards and released it immediately for streaming.

This international threat to MultiChoice’s strategy of working hard to secure exclusive broadcasting rights to top American TV shows through deals with international distributors is significant.

Netflix chief executive Reed Hastings has promised to increase its spending on original content.

The company will, on August 26, also release its first original feature film, Crouching Tiger, Hidden Dragon II: The Green Destiny, in all of the markets in which it operates.

But MultiChoice holds the trump card – it owns sport in South Africa.

Video on demand
Besides DStv and M-Net, the arrival of Netflix will mean direct competition for new South African video-on-demand players such as the Times Media Group’s Vidi, Altech’s Node and MTN’s Frontrow, which all launched services in the latter part of last year.

Then there are continental players such as Nigeria’s iROKOtv, which has set up shop in 170 countries and has an enviable catalogue of African film.

Initially looking at selling content to the African diaspora, iROKOtv is now looking inwards and planning to expand its African markets.

IROKOtv is reported to have raised more than $8-million so far. It boasts the biggest library of Nollywood movies and access to more than 10 000 hours of movies and TV shows from around the world.

In August last year, it announced it was branching out to include Hollywood, Bollywood, Korean and Telenovela television series and movies as part of its content and would be offering a new service of unlimited access for $2.50 a month.

The Vidi platform offers television and film content on demand for R149 a month, and the latest blockbusters can be rented for R15 to R27. These include Friends, Desperate Housewives and Breaking Bad.

Node advertises the Richard Linklater film Boyhood, which won many plaudits in the past few months and is available for rent for R27. The Node shows include Breaking Bad, Mad Men and Weeds, and some old films such as Jaws, Young Guns and Boyz n the Hood.

It advertises 700 hours of entertainment and sport, and a free decoder if you lock yourself in for a two-year contract at R299 a month.

MTN Frontrow offers series that include Breaking Bad, The Fixer and House and films such as Black Sails and Mandela, as well as rock concerts such as My Chemical Romance’s Live From Tokyo. Older films – The Big Lebowski, Eternal Sunshine of the Spotless Mind and Sin City – are advertised too.

The subscription is R179 a month, with films costing R15 to R27 to rent and watch within a 48-hour period.

Shortly after the Node and Vidi were launched, MultiChoice announced that it was extending its BoxOffice service to its Compact subscribers. It had originally been launched in 2011.

Compact subscribers who have a high-definition personal video recorder decoder or the new Explora model, can get access to the service for an additional R75 a month. Movies cost R27 each to rent.

In 2014, the BoxOffice service reached the 600 000 movie rentals a month mark.

Satellite pay-TV entrants

In the middle of last year, the Independent Communications Authority of South Africa provisionally licensed five new pay-TV operators. But they all had to make additional submissions to the regulator before they could begin operations.

So far, only Siyaya has been given the green light to begin broadcasting and has promised to do so this year.

Siyaya is a 100% black-owned media consortium, whose major shareholder is the Bakgatla Ba Kgafela in the North West.

In August last year, they secured a R1-billion deal for the rights to broadcast Bafana Bafana football games from May this year. This includes the women’s and juniors’ teams of the South Africa Football Association.

For R70 a month, Siyaya plans to offer African television content and football. Soccer will be a key component of Siyaya’s offering, with a library of videos on demand.

The other licences that still need to get the green light are CloseTV, Kagiso TV, Mobile TV and Mindset Media Enterprises.

Close-T intends broadcasting as CloseTV and is aiming to service South Africa’s gay, lesbian and transgender communities.

Kagiso TV is part of Kagiso Media, the company that owns several radio, television and online assets, including the radio stations Jacaranda FM and East Coast Radio.

For R240 a month, it plans to offer predominately local content to low- and middle-income households.

Mindset Media Enterprises, which produces educational material, is the commercial arm of the not-for-profit Mindset Network and supplies channels to DStv and StarSat.

Mobile TV wants to offer television services using Korean technology. It intends screening sports, entertainment and news content through two video channels, a visual radio channel and other audio broadcasts.

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Lloyd Gedye
Lloyd Gedye
Lloyd Gedye is a freelance journalist and one of the founders of The Con.

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