VoD and Africa: New report tracks state of play of services, challenges and opportunities

2 June 2017

Top Story

Analysis on VoD: Balancing Act has followed the growth of the VoD sector in Africa from its infancy in 2010. Its latest update report on the sector shows continuing growth of new platforms and offers. The cost of data still remains a challenge for a breakthrough to large-scale audiences on the African continent. However, things have changed a great deal since VoD first started in 2010 in Africa as Sylvain Béletre, Balancing Act’s Senior Analyst outlines below. Is it time for consolidation?

A selection from the report's executive summary:

Impact: high on the African audiovisuel sector; for African governements, producers, broadcasters, consumers and for telcos.

VoD report 2017

VoD in Africa was always going to be potentially a growth area because the continent did not lack for content (music, Nollywood), only the means for effective distribution. Pirate markets showed that customers were out there and they were hungry for content. Africa’s 18-35 year old digital natives were already putting You Tube in the Top 5 most watched sites in Africa in the countries covered by the Alexa rankings. And this was when bandwidth made video viewing a much tougher experience.

Since then attempts to launch VoD platforms have multiplied to serve Africans on the continent and to its diasporas in the world. Balancing Act has recently updated its report on VoD and Africa - VoD and Africa - A review of VoD's services, drivers, challenges and opportunities (updated 2017)

The VoD sector’s first success was iROKO and its YouTube channel, originally intended for the African Diaspora (representing more than 50% of the traffic at the time), mainly Nigerian established in the United States and Great Britain. It focused on Nollywood content from an industry that claims to produce 1000-2000 films a year. Since its launch, there are now over 20 VoD services competing with it on Nollywood content.

Orange also launched a pioneering VoD offer in Mauritius and Senegal but has not been able to spread it across its network.

In parallel, Naspers (South Africa) – number one player for pay TV in Africa with Multichoice / DStv has launched 5 successive services, the last of which is Showmax. Acknowledging the problems with data prices, it has launched content and data bundles with operators in several territories, including Kenya and South Africa.

Then on 6th January, 2016 the industry in Africa was taken by surprise when Reed Hastings, CEO of Netflix, a leading American SVoD leader, announced the launch of its services in 130 countries, including Africa. Since then Amazon has also rolled out across the continent. Followed by iflix this week…

Netflix

On the Francophone side, more than forty platforms are confronting each other in the market and new services will soon be added to this number soon. The recent Canal+ deal with IrokoTV to launch iROKO+ mobile app is a seemingly innocuous but very meaningful move for the pay television leader in the Francophone region.

Observateur

Today, there are more than 180 services that compete in different niches and regions, with content mixing cultural content and local music, films from Nollywood, African TV series, to the blockbusters of major Hollywood majors. Accessing these offers are either free, paid or freemium, by subscription or à la carte, on any device.

Since television consumption is possible on several media - TV, computers, tablets, smartphones, and even using video projectors – we have witnessed an explosion of offers.

TV audiences are increasingly fragmented. Across Africa, the official audience measurement still focuses on linear television and do not really provide meaningful consumption patterns, particularly among 18-35 year old Africans. Indeed measurement of VoD consumtion is often not taken into account within survey results. Also the large international VoD players are saying very little about their traffic results generally, let alone in Africa. There really needs to be a survey to establish African VoD viewing patterns.

With the number of VoD platforms launched in Africa, it’s hardly surprising there have been failures: about 20 services have closed down or are on stand by, due to a lack of convincing results and potential investors, while some new players are willing to explore the continent. The VoD segment linked to Africa is expecting a consolidation phase. The first signal came when Buni TV got bought by Trace Play.

To date, three players seem to dominate the market; One is from South African, the other two are American. Fifteen platforms have announced that they are chasing quality content. In addition, 43 of the listed VoD services in the report appear to perform well, or have gained other competitive advantages to attract potential investors. Finally, at least 3 services that are now closed down would have deserved to be bought by larger platforms to save time and acquire a relevant catalogue. Time for investors to step up…

Three other findings are added to this study: the fact that so far 102 mobile operators launched 4G-LTE in 43 countries on the African continent, allowing them to view videos on Smartphones, tablets or PCs; The steady growth in the pay TV segment in Africa since 2010 confirms the appetite for quality content, even though it affects only a small part of the population; And a recent frenzy of cinema attendance, which offers quality films and responds to the desires of a part of the population.

While there is a strong demand for specific content to be viewed via VoD services, particularly among young people, one of the important questions for the industry is whether the legal offer is satisfactory for the majority of African citizens, otherwise this demand will become one of the driving forces of continuing content piracy.

Secondly, shouldn’t the big industry players unite to create a large player focused on serving the continent with Africa-related VoD content, and have a chance of surviving future assaults by the giant Netflix? Or do they prefer to let that opportunity go for financial reasons, at the risk of being crunched by this global lion?

VoD revenues in the MEA zone are estimated to increase to US $ 1.24 billion in 2021. For Africa, it will be a longer road than in the Middle East to revenues of this scale. But make no mistake, even if the road is long and winding, VoD in Africa will drive data revenues for mobile operators on the continent.

Purchase the market report: VoD and Africa - VoD and Africa - A review of VoD's services, drivers, challenges and opportunities (updated 2017)

 VoD report 2017

Background Briefing – On VoD Platforms in Africa:

Julius Nyingmeh on how Vivabox wants data partnerships with African mobile co's to deliver VoD

Pierre van der Hoven, Tuluntulu on how African mobile content models are changing for the better

Martin Munyua on launching Ronga TV, a new VoD service for Kenya

Olivier Laouchez on how Trace TV's digital offer will make 50% of its revenues in 3 years time

Jason Njoku on how iROKO has pivoted its business from the diaspora to Nigerian mobile users

 

iflix________________________

Digital Content Africa is a fortnightly e-letter covering TV and film, music, social media, media, digital advertising and other digital content and services. It’s essential reading for anyone interested in Africa’s digital transition. We have already produced 88 issues and these can be viewed on this link.

Typical Top Stories will keep your finger on the pulse and have included:

Deezer Next initiative promotes four emerging artists in South Africa with global playlisting strategy and a live event

Kwesé TV signs distribution deals with Africa’s mobile operators for Kwese Play Roku box and mobile streaming – 40% of channels exclusive

Mobile media agency Mobi Hunter combines representing online publishers in Africa with digital advertising campaigns for brands

Africa-based Trace TV launches TracePlay, first urban and afro urban mobile pay platform globally –“We’re doing in 2 weeks what Netflix did in 10 years.”

If you would like to subscribe, just send an email to info@balancingact-africa.com with Digital Content Africa in the title line.

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Aaron Fu, NEST on the three big lessons he's learned about African start-ups

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Claire Munene on market research start-up mSurvey that has investment from Safaricom's Spark

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Jon Coker, Swyft on running a hackathon in Togo and its electric car parts start-up

James Kabiru, Olive Tree Media on how SMS is a key medium for health and agricultural services

 

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Headlines in this edition - 'News update, Telecoms and ICT in Africa':

Telecoms
Internet
Computing
Money Transfer
Mergers, Acquisitions and Financial Results
Digital Content
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