AfricaCast Multi-network Forum Expert Q&A
Monday’s AfricaCast Twitter Q&A was a huge success, and the participants – Steve Christian, VP Marketing, Verimatrix, Anton Smith, CEO Hambisana and Nick Ruczaj, VP Business Development EMEA Vubiquity – have agreed to contribute a blog post here at IP&TV covering some of the main themes in a little more depth than 140 characters really allow…
IP&TV: What evidence do you see of African pay TV operators introducing video services in places where historically it has not been possible?
Steve Christian: Zuku Wananchi of Kenya is a good example of a pay TV operator in the region extending its service to Cable TV and IP TV within one multi-network platform and we should expect OTT services to follow.
By the end of 2012, Africa already had 8.7 million Pay TV subscribers, primarily on the DTH services from Canal Plus, MyTV, Zuku and Multi-Choice. Regional industry analysts the Media Authority confirm that 66% of the region’s Pay TV households will have access to a digital signal within the next four years, including those of from the ambitious middle-east Telecom operator, Etisalat who is expanding its multi-channel distribution throughout the region.
Anton Smith: We are aware of several initiatives that would make television available to lower income people. Some such initiatives are even being funded through community organisations. It is not just traditional TV operators that are getting involved either – new organisations are being created and companies are crossing over from the telecom space. There is a lot of excitement about TV in several parts of Africa at present.
Nick Ruczaj: Specifically looking at VOD, MultiChoice has its BoxOffice service in South Africa, which has been successful despite only being able to offer a few movies at any one time because of the limitations of push Video On Demand (VOD) delivery. iTunes has launched in South Africa too but has had limited success largely due to the cost of broadband. iROKOtv has been the big success story for Hollywood. But apart from these it’s a wide open market and is largely still all up for grabs.
What factors have given rise to the introduction of new video services in Africa?
Steve Christian: African consumers show a high propensity toward adoption and creative applications of mobile services. With this background of adapting to new technology quickly, there is considerable hope that the technological changes of digital broadcasting will be broadly welcomed as long as it is seen to be an affordable option. We have seen many companies and individuals working on business models in anticipation of the analogue switch-off and our belief is that there will be a boom in new opportunities around the selling and distribution of video.
Anton Smith: There are several factors that are coinciding to make it possible to introduce new video services on the African continent. Firstly the digital switchover is freeing up a lot of spectrum, which because of Digital’s more compressed format, operators can use to offer Push VOD services. Secondly, many middle class people in Africa live in secure gated communities and more of these are now being built with high-speed fibre infrastructures.
Nick Ruczaj: Pay TV operators around the globe have been pushing “TV Everywhere” and multiscreen services for a while now. And they have been using TV to drive triple-play bundles, often now bundling Subscription VOD (SVOD) too. However, because of delivery challenges this hasn’t happened yet in Africa. It will start to happen, but I also think you’ll start to see innovation in this area from the Telcos in Africa, not just the pay TV guys. Everyone talked up LTE as a video delivery technology, but I don’t see it for VOD. It’s still too expensive to use to stream to STBs and although people may consume some video on phones (live TV, sports, news, clips) people don’t buy movies on phones.
What are the most common current developments in mobile broadband-based networks?
Steve Christian: The joint announcement of Huawei and Microsoft on their plans to launch a sub-$150 MS8, Huawei Smart Phone to Arica, is significant. Not only does this place smart phones within reach of a large percentage of the population but when combined with LTE networks creates an extra-ordinary opportunity to establish competitive hybrid service operators that can effectively compete with the few large satellite based content platforms – including those that currently have a near monopoly in large parts of Africa. This will act as a stimulus for the whole industry.
Anton Smith: Telecom operators all over the African continent are suffering from much lower margins than a decade ago and have strong incentives to develop value added services. On the other hand, they are looking at the large investments required for LTE technology and are wondering what services they can run on it in order to monetise it. So it will be interesting to see how television and video fit into their thinking going forward. Telecoms have already made a much bigger impact in Africa than early observers could have predicted. Some of them will surely do very exciting things.
Do you think operators can monetize multi-network services over the next 2-3 years? If so, how and if not, why not?
Steve Christian: Yes, we are seeing evidence of Free to Air operators, for example evolving from the current advertising supported only models to a hybrid approach – a combination of free and pay services. This model may comprise direct payment for on-demand and niche content with free for the content, which can still attract large numbers of viewers and still support advertising revenue. Irrespective of the model used, these operators will need a simple, cost effective and future-proof security solution that will allow it to secure all types of video content across all types of distribution networks and to all types of receive devices such as the solution provided by Verimatrix.
Nick Ruczaj: Yes, FTTH has great potential to support operator VOD ambitions and we are partnering with a number of fibber providers to create such services. However, fibre projects have tended to be only at the metro/B2B level to date, not yet truly B2C propositions. But that will start to change in 2014. At Vubiquity, we definitely see Africa as the next big untapped market for VOD. Broadband has held us back but it feels like there’s a lot of momentum gathering.
Anton Smith: Technology already exists which would allow IPTV operators to offer much more targeted, localised and less intrusive advertising than was possible with linear television in the past. Using powerful recommendation engines at the back-end and smart middleware running on the Set Top Box (STB), ads can be targeted at different family members based on the content they watch (including VOD content) and potentially on other factors like their social media profiles.
It will mean a very different audience experience and should actually increase the opportunities each advert has to be displayed and acted upon: Dad can watch an action movie on the TV and be served with car ads, while mum can sit on the same sofa and watch a romantic comedy on her tablet while being served with cosmetic ads. Both can be served with Ads from the local pizza delivery service, with a call-to-action button built into the ad so that they can order dinner with minimal effort.
What are the most common challenges to the growth of multi-network services in Africa?
Steve Christian: A slow moving regulatory framework, plus conflicts in priorities, which creates uncertainty and unevenness in the overall program
Limited existing infrastructure for distribution of signals and supporting backhaul services
Offering uniform access to public broadcast services post transition. Unlike other countries there is no alternative cable network to support alternate analogue rebroadcast for extended periods after analogue terrestrial signals have been switched off.
High urban poverty levels that will require governments to subsidize digital STBs in some capacity. The best approach to this challenge is unclear; cheaper STBs will maximize the reach of the roll-out but offer very little upside for value added services, while more advanced boxes will perhaps slow the roll-out but offer operators more long term opportunities.
Reallocation of broadcast spectrum to alternative uses and the business opportunities that this may stimulate. These collateral concerns are compounded as the overall program is delayed or challenged.
Anton Smith: The limited disposable income available to the majority of the population of the African continent dampens the potential growth of such services. On the supply side, the relatively under-developed broadband infrastructure, especially the last mile, poses significant challenges. However I don’t want to seem to be pessimistic. In Africa we love our television. We love sports, and music videos. There is a growing market for multi-network services.
Nick Ruczaj: The biggest challenge for VOD particularly is still delivery, particularly the availability, speed and cost of broadband. But you will see new platforms launch in 2014 using a variety of delivery methods: DSL, FTTH, push VOD over satellite and DTT, and even kiosks/USB sticks to bypass broadband altogether.
Do you think African operators have access to the necessary skill sets to create multi-network services?
Steve Christian: Many in the TV industry see Africa as the last significant global market for the development of new digital platforms and associated information and entertainment services. One approach that operators can take to help catalyse this process is embracing technology vendors that have experience in successfully deploying technology components in other parts of the world and creating partnerships. Tapping into this knowledge and experience and establishing long term relationships rather than simply selecting technology on an ad-hoc or price-first basis seems to be a logical way forward.
Anton Smith: We at Hambisana would certainly argue that the skills are present if the operators know where to look. Quite a number of our employees have worked at different international broadcasters. Furthermore we invest a lot in training our staff on the latest technologies, such as those of Verimatrix just recently. Of course, in an industry that is constantly innovating and so requires constant up skilling, skills are always in short supply in Africa, and importing skills from Europe/US is prohibitively expensive.
How important is digital growth to African government?
Steve Christian: Individual African national markets are opening up and their economies are growing at a much faster rate than other more developed parts of the world – albeit from a lower baseline. The implication is that consumer income and, more importantly, disposable income are both increasing to the point where these new services become commercially realistic. It’s important that local integrators and operators are in charge of their own destiny as the markets take off.
Anton Smith: Digital technology has the potential to add several points to GDP growth in Africa. Its uses in education, development of the arts and trade should not be under-estimates.
What is the content mix on African VOD services? (International/African)
Nick Ruczaj: Today most of the services that have launched either focus on either International or African content, however, I believe that those that will be most successful will be those who succeed in combining the two to appeal to Africa’s diverse and growing TV audience.
Steve, Anton and Nick will be addressing a forum, “Multi-network solutions in the Real World: Proactive Digitalisation Strategies to Maximise Revenue Growth,” co-hosted at AfricaCast on November 13, 2013, 1:35pm to 2:50pm, at the Cape Town Convention Centre, South Africa. It is free to attend, but seating is limited, so please reserve your spot today.
AfricaCast (Cape Town, November 12 – 14), is the region’s premier show on the future of broadcasting.For booking and more info go here.