Balancing Act: “VoD platforms have grown enormously in Africa”

Investment

Ahead of Balancing Act’s Chief Executive Russell Southwood’s  appearance, he gives IP&TV News the lowdown on what’s happened in the many months since last year’s event…

Hi Russell. We know you’re going to be chairing this year’s AfricaCast. What conversations do you think are going to dominate 2014’s event?



There are a range of anxieties and excitements that can be grouped under three headings: the digital transition in broadcasting, the lack of good local content in volume and the changing business models. Only a very small number of African countries will meet the 2015 deadline for the transition to digital broadcasting. I’ve heard recently that Ghana has pushed back on the deadline until December 2015. Some countries have met the deadline by having what you might call a “hard stop”, which means that they turn off the analogue signal without worrying about the last 10-20% of citizens making the transition. The uncertainty about the digital transition is affecting the overall health of the industry, particularly as advertisers will pay less for audiences that have been reduced in size.

The volume of new channels associated with the digital switchover is beginning to ramp up. For example, in Kenya there are now over 30 new channel operators, in addition to existing broadcasters planning their own new channels. No-one expects all these new channels to survive in the medium term but it is putting pressure on the local content ecosystem to produce more content without there being any clarity about how successful the new channels will be. The new channels will also take their cue from pay-TV and be themed by topic rather than time-based.

Looking back over the last year, do you think there’s been sufficient growth in African broadcasting? If not, why not?

It’s always extremely difficult to tell where there’s been growth. Even in those countries where ad spend data is available, it does not give a true picture of what’s happened. For example, in one West African country where we did work, the advertising spend based on rate card figures went up but the actual spend was so heavily discounted, it went down.

The professionalisation of African media planning is long overdue. Broadcasters need to finance the commissioning of reliable market research that is widely trusted. With the digital transition, it should be perfectly possible to create a 1000+ audience panel with set-top boxes with a return path that will give you what people are watching almost instantaneously: in other words, “overnight” results on who’s watched what the night before. With the increase in TV channels, if this does not exist, then broadcasters will be selling something they can only guess about and advertisers will be buying blind.

In terms as the growth in OTT services, have there been any approaches you would deem especially promising or exciting?

VoD platforms for film and TV have grown enormously in Africa as bandwidth has improved: the updated version of our report on VoD platforms counts over 80 of them (82 as of 15 July 2014).

The arrival of 4G will simply reinforce this trend. If VoD platforms can offer local content at slightly over the cost of buying a pirated version in the market, with better quality and convenience, then they will eventually find a ready market. Four of the many VoD platforms stand out by dint of having attracted significant numbers of users: Afrinolly, Buni TV, iROKO and Wabona.

And what about the question of connectivity?

For users in cities, when things are working well, connectivity is much less of a problem than it used to be. But the mobile operators built narrow band networks for voice and have been layering on data upgrades ever since. It really needs a network designed for data from the bottom up.

The other issue is price. The cost of data has come down in more competitive markets but this is a pre-condition for success of OTT models in any African market. The problem with mobile operators the world over is that with things like 4G they like to operate a “price glide”. At launch you keep it really expensive and remove the maximum amount from wealthier users before over an 18 monthsto two year period producing a lower price for a wider number of users. Why not start with the price that will get the widest number of users instead of chiselling your most valuable customers? Since it will all be data, operators need to get used to providing as part of their business the cheapest dumb pipe possible.

How much opportunity could PPPs present to the ecosystem? What are their main advantages and disadvantages?

In order to produce the cheapest supply of data (because the mass of Africans can pay less for it), you need operators that will handle volume at low cost. This will only happen if operators either buy from carriers’ carriers or share infrastructure (either through private alliances or through PPPs) or have sufficient volume to justify operating their own network.

The upside of this kind of shared infrastructure is lower investment cost and therefore cheaper wholesale bandwidth supply. The downside is that any shared system has to allow for new entrants and has to be regulated in such a way as to ensure that it is not simply a monopoly by another name.

In some of the larger markets, network competition may work just fine for the better routes and in the cities so it may be shared infrastructure needs then to address those areas where the market struggles to deliver low cost supply like remote and less well used routes. For smaller countries, it may require a level of subsidy to encourage the investment in fibre network infrastructure.

Looking ahead, what’s the most exciting prospect for the coming year?

There’s been a real flourishing of interesting African TV and online content and the most exciting prospect will be to see business models coming together that will rewrite how TV, media and film operate on the continent.

AfricaCast, Africa’s premier show on the future of broadcasting, takes place on the 11th-13th November 2014 at the Cape Town Convention Centre, South Africa. Go here for booking and info

Source: iptv-news - By Thomas Campbell July 8th, 2014