Uganda: Pay TVs Rush to Tie Down Subscribers


The public is excited. And the buzz suggests that a new pay television service in Uganda will change the face of television. Ugandans, on June 29, received maiden broadcast from Gateway Television (GTV), a subsidiary of UK-based Gateway Telecommunications. It was the first time a pay TV threatened to break the monopoly Multichoice has enjoyed since 1995.

Riding on $40 million (Shs64.5 billion) investment in Africa, GTV expects to use East African region as launch pad for rolling out to 18 other African countries. And it is the first time GTV is operating in Africa. "We chose East Africa because it presents the best market prospects; it has the lowest pay TV penetration in sub-Saharan," said Daniel Kagwe, the GTV General Manager.

Viewers will have access to international channels, news, sports, movies, popular series, music, as well as GTV's own channels. But this is not what has got the public excited. GTV recently acquired rights to broadcast 80 per cent of the premiership matches, kicking Multichoice out of its stronghold.

At a monthly subscription of Shs70,000 (US$44) subscribers can watch their popular sport compared to Shs115, 000 (US$72) subscribers paid monthly to stay connected to Multichoice's premium bouquet.

GTV's successful bid to broadcast 80 per cent live premiership matches is typical ambush on the competitor's stronghold. Multichoice has built a strong brand around television entertainment with strong focus on sports.

The exclusive rights to broadcast premiership matches, DStv enjoyed after the collapse of TV Africa turned it into a dominant brand that suffocated any competitor. Arabsat, a pan-Arab pay TV channel, tried to break this dominance but lack of sports channels and its heavy focus on Asian content did not appeal to the majority of Ugandans. However, the entry of GTV in the market threatens to break the dominance. And GTV seems to have done its homework for it attacked its competitor where it hurts most.

Well aware the popularity of premiership on the African continent and the fact Multichoice's exclusive rights had expired, GTV launched a hostile bid for Category A of premiership rights. Industry analysts say the bid could have been three times more than what Multichoice offered. GTV as a result walked away with category A, Multichoice settled for Category B, and NTV took category C, which catered for free to air TV stations.

Multichoice will broadcast 20 per cent of the premiership matches, and Nation TV (NTV) will broadcast one live "big match" per week as well as premiership highlights on Monday and previews on Friday. The match details are yet to be released. GTV therefore seeks to use the popularity of premiership to break ground in Africa's pay TV market.

This ambush has forced Multichoice to look elsewhere to compensate for lost ground. "We have secured rights to screen La-liga, copa America, French league, African Cup of Nations and the UEFA Champions league," said Multichoice Uganda General Manager Charles Hamya. "We believe in competition because it makes us become more efficient and much more customer centric; we are now more focused on the customer because we are trying to retain them," he said.

While GTV touts Premiership broadcasts as its cash cow, Multichoice maintains that its strength lies elsewhere. "We focus on more than football," said Hamya. "Our strength is in the wide range of products that we offer; we are focussed on developing local content such as Big Brother, Nokia Face of Africa, and Deal or no Deal."

DSTV also believes its multi-channel product will offer it some leverage over competition. DSTV has 10 sports channels, which means it can show up to 10 live matches. GTV, in contrast, has 3 sports channels and can therefore show a maximum of 3 three live matches despite having rights to broadcast live 80 per cent of all premiership matches.

This means that commercial clients like hotels, restaurants and bars are best placed to use DStv because of its wider options while domestic subscribers may only want to watch one item at a time. GTV however is not swayed by DStv's multi-channel product. Kagwe said: "We are more focussed on content that meets customer's needs rather than a number of channels that a customer may even never watch. We want to demystify the belief that pay TV is meant for the rich."

However, Hamya maintains that successful pay-TV businesses are built around a multi-channel TV environment; what appeals to a Ugandan may not appeal to a Kenyan or Nigerian. "You cannot focus on just one market and hope to do pay TV business because the investment is very significant," he said.

As pay TV stations take on competitive spirit, Free-to-air television stations such as NTV, WBS, UBC TV, are not sleeping either. "We consider GTV and Multichoice to be our competitors because we compete for the same audience," said Victor Ngei, the NTV General Manager.

He said: "We are strengthening our products as well as well as introducing new programmes to entertain, educate, and inform."

Although NTV got a bumpy start after the Uganda Broadcasting Council switched off its mast citing "technical violations", it has since weathered the storm and the latest addition of premiership matches onto its wide range of product offering that comprises soaps, drama, movies, among others, has got other free-to-air TVs refocus their programming to meet the ever-changing customer tastes.

WBS TV and UBC TV have, for instance, partnered with Multichoice Uganda to broadcast some of its programmes in return to giving them advertising revenue. "We feel that is the way of attracting market because people get exposed to quality programming," said Hamya.

While frantic competition among players in the television industry paints a glossy picture on the burgeoning industry, a close examination reveals a different picture. According to the 2002 Population and Housing Census, 231,366 households owned television sets, accounting for 4.5 per cent of the total number of households. The population, which was estimated at about 24 million at that time, has since increased to about 28 million, according to State of Population report recently released by the Population Secretariat. And the majority of households still opt for free-to-air television stations.

Independent research done by GTV shows that there are about 1 million households with television sets in Uganda and about 9,000 pay TV subscribers who account for less than 1 per cent of households with televisions sets. This means that about 800,000 households can be lured to pay TV as long the products are attractive enough and prices are not prohibitive.

"Pay television is not a simple business; we lost money in Uganda for ten years before we could just start making a small profit," Hamya said. "Five years ago we reduced our subscriptions in a hope that people will subscribe and we were actually surprised that people didn't subscribe". Multichoice has sold about 25,000 decoders since it began its operations in Uganda.

However, its subscribers now oscillate between 12,000 and 14,000 depending on "seasonal changes in demand", according to Hamya. He remains apprehensive of the market growth in Uganda. "We don't think the market will achieve the levels of growth witnessed in the Telecom sector because TV viewership largely depends on disposable income. Until the economy grows we may not register substantial customer growth," Hamya said.

(The Monitor (Kampala), 3 July 2007)