With the launch of another TV streaming service in South Africa looming this afternoon, it’s easy to speculate that satellite and broadcast TV is on its way out here.
But media analysts from Ovum reckon that for the next five years, at least, traditional TV and – more controversially – print media aren’t going to be too troubled by the rise of digital competition.
This afternoon, publishing goliath Naspers will announce the launch of ShowMax, a Netflix-style video on demand service that lets you watch what you want, when you want for the price of a small monthly subscription.
Similar services have failed to catch on – Altec’s Node closed down last month and Times Media’s VIDI is believed to have thousands, rather than hundreds of thousands, of users – but one reason commonly cited is that their libraries of viewing materials aren’t compelling enough.
Many South Africans – although we don’t know how many – go through technical and financial hoops to access Netflix’ service from the United States even though it would be cheaper just to download the same shows via BitTorrent, purely because the selection of shows and films on offer is so good and – once it’s working – fast to access.
Up until now, it’s been impossible to have a conversation about why local services can’t compete on content without mentioning Naspers. Talk always turns to the fact that through Multichoice and DStv, Naspers has local licensing with big movie and TV studios sewn up so other publishers couldn’t get a look-in. That theory will be put to the test when ShowMax is announced – if Naspers can’t get a decent line-up right, no-one can.
Not that it should matter too much to existing broadcasters, says Ed Barton, head of TV practice at Ovum. Speaking at an event organised by Business Connexion to promote the My World Of Tomorrow conference (disclosure, we’re a media partner for the event), Barton said that international evidence is that pay TV doesn’t have much to fear from video on demand just yet.
“It’s about the 10th anniversary of people saying that TV as we know it is dead,” Barton says, “Yet the TV industry is in reasonably good health, and able to go on the offensive.”
In South Africa, Barton says, limited access to bandwidth will obviously limit the appeal of video on demand services for most people. But experience shows that even where that’s not an option, people still watch regular TV.
“Seventy to eighty per cent of streaming video on demand subscribers also subscribe to pay TV,” Barton says, “What I think is happening now is that we have many more ways of watching television and the audience is becoming more segmented. We have started the move from the household being the unit of consumption, it’s not the individual.”
It might be tempting to dismiss Barton’s predictions as a bit ‘head in the sand’. But he does agree that long term the future is in video on demand, streaming services the transition will take a lot longer than people realise. Even where sports rights have shifted away from pay TV to other models, with Premiership football in the UK and wrestling in the US moving to Sky and BT Vision, and the WWE Network online respectively, it hasn’t yet caused viewers of other services to abandon them in droves.
What has happened, he says, is that competition has increased the variety of packages on offer, especially when it comes to ‘triple play’ services which offer phone, television and broadband internet at a single price. Even though triple play exists in South Africa: VIDI has a partnership with Vodacom and MTN has launched its own streaming service, FrontRow, and Telkom will offer a DStv subscription as part of a bundle, it hasn’t had much effect yet.
While bundling means that prices for basic services are forced down, Barton says, by tailoring specific packages to specific customers operators can reduce churn. The good news for TV producers, says Barton, is that with the right messaging they should be able to craft convincing messages to attract advertisers, especially as more people use set top boxes and apps to access entertainment which allow customised advertising based on viewing habits.
“People are blissfully unaware of how much data set-top boxes collect about you when you watch television.”
It’s easy to agree that TV habits are unlikely to change much in the short term in South Africa, but Barton’s colleague from the digital publishing world is more controversial. Nick Thomas is practice leader for Digital Consumer Publishing and looks at ebooks, digital newspapers and magazines.
“Generally speaking,” Thomas says, “We see a rise in revenues for print magazines and newspapers [in South Africa] over the next five years.”
Anyone who’s watched South African newspapers nosedive in circulation, or seen the many mag closures over the last few months may find that hard to agree with. Former editor-in-chief of the Mail & Guardian Chris Roper, for example, says that print is in terminal decline and publishers aren’t doing enough to transition to a digital audience fast enough. But Thomas is careful to define his parameters. English language papers will continue to struggle, he reckons, because the competition for reader attention is vast given the amount of free content published in English every day.
“Digital has a lesser role in coming years here than elsewhere,” he says, “Partly because we believe the opportunities for print media are very good. We know that some English language titles and Afrikaans titles are losing circulation, but there’s a lot of non-English community papers that are growing.”
Thomas says that rising literacy levels has helped to grow demand for local language content, and that South African publishers and advertisers are missing opportunities.
There will be growth in digital ad spend, Thomas says, and he quotes the recent PwC Media Outlook Report which predicts that just 8.4% of revenue from books and magazines will be digital by 2020, but that’s small compared to the global market which will be over 14% digital.
The most overlooked opportunity at the moment, he says, is in publishing deals with mobile operators. Given the control the likes of Vodacom and MTN have over when people are reading online, it’s surprising how few content deals for mobile portals have succeeded