The convergence moment – Gateway launches pan-African pay-TV service

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African communications provider Gateway Communications this week announced that it would launch GTV, a pan-African pay-TV delivered service. By lowering the price of its service it will create some competition in what thus far has been a largely uncompetitive area. But whilst there has been much talk about convergence, this move is the first major scale, pan-African investment in broadcast content by a telecoms connectivity provider. Russell Southwood talks to Gateway’s President Julian McIntyre about what prompted this move.

GTV will provide a variety of content at a more affordable subscription to its main rival DSTV, including sport, movies, popular series, music, education and religious content. The service will carry both major international channels as well as a number of “in-house” channels. The service will also focus heavily on promoting African content.

The GTV service will be available from the middle of 2007, with a phased roll-out across sub-Saharan Africa. GTV will be targeting customers who have previously been unable to afford subscription-based services and have been limited to a small number of national free-to-air television stations.

Q: Why did Gateway choose to go into pay-TV? At first glance, it’s not an obvious move.

Let’s start with the basics. It’s a market-driven opportunity and the greatest opportunity in pay-TV globally is in sub-Saharan Africa. There are currently 4 million colour TV sets in the region but only a 1-2% take-up of pay-TV. What is happening is that penetration rates are converging globally. Africa may have different routes to market but it will not be exempt from this trend. So for example, pay-TV penetration rates in eastern Europe are currently 15-20% but will reach Western European rates of 30-40% before too long. Indeed these kinds of growth rates have been happening everywhere but Africa. There may be different cultural elements in terms of content but Africans like everyone want information, education and entertainment.

Q: I can see the opportunity buy why Gateway?

We have played a substantial role in facilitating communications penetration in Africa. We have a strong growing market in that sector that gives us a great cash flow. We see a number of opportunities to diversify into new areas. We already have a proven track record in building a successful business and we feel pay-TV is comparable to the beginning of mobile phones in the late 1990s.

Q: Are you worried that DSTV has a “a lock” on many markets at the moment?

With 1% of households taking its service, we’re not really talking about a lock on the market. If it is, it’s the kind of lock I’d like to unlock. It’s going to be about offering the right content and we’ll be making announcements on that in the near future. The content proposition will be better than DSTV. We’re making the service affordable. The current incumbents have kept pay-TV an elite product. We want a service for the masses. We want it to be a service that people will feel is part of their lives.

Q: What’s the timetable?

We’ll be broadcasting over Africa in the next few months. A commercial service will be available mid-year. There will be heavy marketing of the service in August.

Q: Which markets will you be going into first?

 From day one, we will have content that is relevant to Anglophone countries. We will add Portuguese, French and content relevant to Indian communities later. We will be looking at the larger markets outside South Africa and Nigeria: these will include SADC countries and a selection of countries in West and East Africa. We will be distributing in 9-10 markets. We have content rights in every country except South Africa and Nigeria.

Q: How will you tap into the market potential?

It’s important to us that in each of the countries we operate in that we have local expertise, work with local companies and have local content. This is not a South African or European service, it’s one delivered specifically for sub-Saharan markets. We want to promote local, national and regional cultures, as well as also promoting local employment.

Q: Will you be putting money into content?

In the short-term, we will invest substantially in content rights. In the longer term, we intend to do so. The African content market and African media suffers from a lack of TV distribution infrastructure. When we’ve been talking to producers and directors they’ve been telling us that there’s nowhere to sell their work. The free-to-air television channels either lack the resources or are unwilling to do so. Existing pay-TV does not promote local content.

There is a massive opportunity to develop local media markets. We want to promote access to quality content across all genres. For example, sports in general (and football in particular) are underdeveloped because they have no income from television. Pay-TV could do a great deal more to promote local interests.

Africa Film & TV, the publisher of the moving image in Africa, has been acquired by Southwood Consultants Ltd, publishers of the weekly e-letter Balancing Act’s News Update that covers telecoms, Internet and computing in Africa.

Balancing Act will be publishing a fortnightly e-letter African Broadcast, Film and Convergence. A pilot issue will be published in two weeks time and it will launch in early Spring this year. The Africa Film & TV Yearbook 2007/2008 will be published this autumn. The e-letter will provide news on broadcast and film, distribution, investment, regulation and policy and technology and convergence from all over Africa.

According to Balancing Act CEO’s CEO Russell Southwood:”This is an exciting time for African media. The opening up of broadcast licence opportunities in South Africa looks like being the starting gun for a wave of media liberalisation across the continent. Africans will get more information, a greater diversity of opinions and wider diet of TV and film fiction productions.”

Africa Film & TV was suspended from publication in November 2005, following the closure of its Zimbabwe production offices. Outgoing Africa Film TV publishers are Furco Ltd of the UK. Furco CEO, Russell Honeyman, said that: "The acquisition of Africa Film & TV by Balancing Act is great news for the African broadcast and content creation industries. Balancing Act performs an excellent service in providing unbiased and timely news of ICT developments in Africa. Balancing Act has a track record of providing timely information in a professional way with content that is always relevant for its readers”.

Russell Southwood, CEO, of Balancing Act, said, "We are delighted to have acquired Africa Film & TV. The title has been the journal of record for momentous changes in African image production and broadcast, from the apartheid era, to the launch of multi-channel satellite TV, to the arrival of broadband Internet. A new chapter is now beginning and we look forward to the growth of a strong broadcast and film industry on the continent.”