AfricaXP seeks to create a game changing B2B business model for content trading using cloud delivery
Africa Media Management (AMM) and its AfricaXP Channel bouquet addresses content packaging and trading issues in Africa with a game changing business model and a cloud based channel delivery platform. They call it AXP 1.0.
As a TV content producer or distributor, selling content to TV channels across Africa is rather frustrating: over 50 countries with over 500 FTA TV channels, mostly with small budgets. Travel costs are high but prices are low and volumes are often small. Content delivery is also difficult and costly, which all means low return on investment. Craig Kelly, CEO of AfricaXP, has developed a number of solutions to some of the most pressing challenges for African producers and international content distributors alike. Balancing Act’s analyst Sylvain Béletre talks to him about his model that and how it could help change the industry.
Amongst African media commentators generally and at industry events such as DISCOP Africa, there have been many references to the need for a new leader, a kind of game changer who will bring solutions to the market and facilitate the development of the industry to the level it needs and deserves to be.
Among industry experts, there has not been much agreement as to the timing of this great event: nobody knows when it will happen. So while international investors and major media companies eye Africa as the last great frontier, they are also wary, as they are in fact not sure how to capitalize on this huge opportunity.
While the industry hopes and waits, most African producers are struggling. It’s no easy feat trying to cobble together sufficient funds to produce programmes from art grants, social development funding and occasional small commissions from FTA channels. As the demand from upcoming DTT platforms or new alternative distributors like VoD platforms keeps growing, African producers don’t have content on the shelf to meet this demand, nor can the prices being offered fund new production on a single sale. So producers cry out for more – more grants, more commissions, more local content quotas, more Dollars per hour. They want broadcasters to make them viable.
The trouble is most broadcasters have challenges of their own. Problems like the fact that they need to invest significantly to be able to migrate to new broadcast technologies like DTT and IPTV - while advertising is famously slow to move to new media platforms even when they have proven audiences. Then they must fill the new channels this technology offers with compelling content. While engaging with this, they simultaneously need to buy or produce better programming to maintain their audience share in increasingly competitive and more complicated broadcast markets. In short broadcasters need more and better content, but at lower cost per hour, precisely while producers demand higher fees for content as they simply can’t improve quality on the rates presently being paid.
So both parties need the other to move in the opposite direction - clearly the model is broken and so far, nobody has come up with the right fix.
When I started watching this sector 5 years ago, I got quite frustrated by the lack of information available on this market and the lack of a common voice to help solve the pressing problems with content distribution. The picture is slightly different today: I get plenty of industry articles each day; DISCOP Africa, the “MIPTV of Africa” allows content buyers and sellers to meet up once a year; DTT and Broadband internet access are being rolled out, digital technology is more affordable; there are several African film festivals in place across the world; South African blockbusters and Nollywood films cross oceans and billions have been invested in the industry. We are at a turning point but the sector is still missing something.
Experienced independent pan African television producer, Craig Kelly recognised some years ago, that one of the key reasons for the failure of the African production industry to expand sufficiently was the lack of a content market of any scale in every country except Nigeria. He says "As an independent producer I couldn’t find buyers easily: the commissioning process at bigger broadcasters is heavily relationship dependent, while other smaller broadcasters couldn’t pay enough on their own to cover production costs. I needed to find a way to sell to multiple broadcasters simultaneously and with one transaction and content distribution cost.” So he quit production and went into distribution to address one of the sector’s key challenges: the African broadcast market's extreme fragmentation.
Not surprisingly, Nigeria’s Nollywood proved to be Kelly’s inspiration to find a new model more suited to the digital age. “Nollywood had been growing rapidly around its unique content market and VCD/DVD distribution network and it was based on the commercial model we know best in Africa: farming. You grow or create your product and sell it in the market immediately – then reinvest in more product with the proceeds, making some profit in each cycle.”
AfricaXP’s new commercial model recognizes that the industry needs a Nollywood inspired system for the whole continent, but one that also needs to cross boarders and that recognizes that the age of DVDs is rapidly passing us by. It must enable distribution worldwide and into new content delivery platform of all technology, shapes and sizes. It must also be adaptable to various new commercial models like revenue share and pay per view.
Above: a broadcast control room (Globecast).
“Content distribution has become a full time occupation - it’s no longer a trip to the market on a Wednesday morning for a quick one-to-one cash transaction. To some extent we need to be more like the music industry and collect royalties from multiple broadcast platforms on an ongoing basis. Our mantra is “exclusivity is the enemy of progress” because in a market with over 500 broadcasters, the key to success is multiple low value transactions across every platform type. This is time consuming, requires specialist expertise and ongoing management and attention to detail. This is not a focus that producers can provide in between takes on the set of their next project and so AfricaXP steps in.”
They have built a state of the art Central Content Repository Platform for both broadcasters and distributors through which they can efficiently match buyers (broadcasters) and sellers (producers) in an effort to provide the function of a “market”. In so doing, they assist African content producers monetize their libraries, catalogues and ongoing output across all established and emerging media channels globally. In addition, they offer both African and international content distributors entry into multiple African markets though a single gateway by plugging them into a client base which includes TV broadcasters, closed circuit TV service providers, mobile operators and mobile social networks or content service providers.
“We design, assemble and distribute bespoke or themed channels with the content in our library in response to broadcaster demand. We can customise and deliver a channel to a customer anywhere in the world at very low cost.”
It’s clear that the strategy is to partner with good quality content suppliers and then fill the extra channel capacity created by technology infrastructure advancements by delivering their own bespoke African and international themed channels to emerging or expanding broadcast platforms.
“We are already providing traditional content supply services as well as packaged channels to customers and we will see the complete channel delivery business growing rapidly in the rest of 2014 and 2015 as demand comes from both sides – our broadcasters and content suppliers. Broadcasters need channels and distributors see participating in a quality channel offering as being an effective way to develop stable future revenue growth when compared to the vagaries of ad hoc programme sales – especially in the light of our low risk 50/50 revenue share model.” says Kelly.
“We share the revenue from every content supply contract on a 50/50 basis with the respective content suppliers. Once understood that this is a no-risk revenue share model (because content is only supplied once payment is made by the broadcaster in advance) it has been very well received by all of our partners.”
“Large international distributors are excited by the fact that we assemble channels and distribute the signal to broadcaster clients at our own cost – they therefore don’t have to invest in playout, uplink and satellite costs not knowing if they will ever breakeven. This as a risk-free invitation to enter an exciting but uncertain market.”
This sounds compelling for large companies with big catalogues but is perhaps less relevant for African producers?
“Not at all” says Kelly. “The benefits of being part of a quality channel are there for all suppliers whether a channel is programmed by one supplier or twenty - and it’s not only the no-risk entry into the market and free signal distribution that’s exciting, it’s the value of being part of a brand that is building a relationship with the audience. The stronger the relationship is, the higher the value of the channel and by extension the constituent content.”
“But smaller African producers also benefit by eliminating, marketing, sales, content duplication and supply costs. We also quality control and “fix” quality issues in their material where we can, reducing broadcaster rejections for producers and at the same time, assuring our broadcast customers of a reliable supply at a predictable quality. To date this has not been a given in Africa.”
AMM are also offering African producers a range of project development assistance in order to transform their programmes into sexier, smarter products that have not only African, but also international sales appeal at markets they attend, including MIPCOM and MIPTV, AITEC Africa in Nairobi and of course DISCOP Africa.
“I am a London Film School graduate with experience over 20 years pioneering low cost, high quality production across the length and breadth of the African continent and our development and support team has produced at the top end for the SABC, Multichoice, eTV, TVAfrica, BBC, TV5 and many others – so we are well qualified to provide assistance.”
The support AMM provides could also take the form of supporting The AfricaXP Channel suppliers in raising funds in order to facilitate productions or coordinating partners in multiple African countries to contribute towards the production of pan African programming with greater global sales potential.
“We could even go as far as getting involved in script writing, but we do not produce programmes ourselves, our role is to assure quality and volumes and aggregate – so that we can confidently meet broadcasters ongoing needs.”
So what benefits do they offer to African TV broadcasters or telcos with a B to C media offering?
“The situation most broadcasters in Africa face is a shortage of cash, content and channels. As a multi-genre one-stop-shop content and themed channel supply origination, we reduce the time, trouble and cost of acquisition and offer bulk discounts in exchange for long term contacts. We quality control and can even take content orders which we can get our suppliers or producers to meet. In short, we supply a high quality but scarce resource at a great price.”
“Looking at content from outside Africa, the best international content channels are already sold exclusively in Africa. Broadcasters need to make another plan and assembling a bouquet of their own channels is not a quick, easy or cheap option. Channel playout equipment is costly to buy and operate 24/7, while acquiring content programme by programme is far more costly than buying a complete channel. We can close the gap by offering clients the themed channels they need. Further, we can programme our channels especially to African tastes and interests and even allow 100% customization for a fee – in a sense we feel we can turn the challenge of shortage into an opportunity.”
To submit your TV programme or to buy programmes and channels, contact AMM here or email Craig at Craig(at)africamm.com
Video interview: Craig Kelly on why Tanzanian Swahili movies are much better than Nollywood
Picture above: Balancing Act’s broadcast TV market analyst Sylvain Béletre.
Digital Content Africa: Balancing Act’s web TV channel Smart Monkey TV has launched a new e-letter called Digital Content Africa. On a fortnightly basis, it will cover online film, music, publishing and services and applications. We have already produced 9 issues and these can be viewed on this link: Essential reading for those in broadcast or film or anyone just interested in what African and relevant international content they can now get online. If you would like to subscribe, just send an email to email@example.com with Digital Content Africa in the title line.
Here are some examples of past issues below:
Online film, music and TV content in Africa – In search of the elusive business model
Video clip interviews this week
Mo Abudu on how she started Ebony Life TV and licensing Desperate Housewives from Walt Disney
Gaurav Singh, Chief Digital Officer, Scan Group on when brands will spend more on digital in Africa
Hans-Christian Mahnke on Namibian film-makers and the state of the country's film industry
Martin Munyua on the things that make Dads Can Cook a successful TV format show
Grazyna Koscielska on South African smartphone gameshow Thumb Wars & new version for Abu Dhabi TV
Steven Markovitz on African Metropolis and Jim Chuchu's contribution Homecoming
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