A new partnership that will allow Africa’s largest pay TV operator, MultiChoice, to add content from international online streaming giants Netflix and Amazon Prime Video to its platforms may point to a future of increased revenues and investment for the local entertainment sector, says new research from professional services company Accenture.
Roman Magis, principal director for video, advertising and content at Accenture Africa, spoke to Business Day about the direction the industry may be headed.
How much growth do you forecast for the local broadcast industry?
Our research at Accenture indicates that by embracing digital technologies, SA media could generate an additional R93bn in value by 2026 for the local media industry.
What are the likely drivers of this growth?
Interest from international companies is a big opportunity for the local industry. Amazon is not as present in SA but Netflix has become quite embedded. They’ve indicated that they are going to have Africa as a content hub which points to additional investment and content on the continent.
Netflix is slated to be spending about $17bn (R283bn) — which is about 10 times the revenues of MultiChoice — on original content, globally, in 2020. About 5% to 8% of that is likely to come to Africa. The show Queen Sono has been successful, even outside SA, pointing to the creativity and manpower in Africa that such a company can continue to invest in.
What do you make of MultiChoice's new Showmax Pro offering?
It’s a bold move. MultiChoice can’t compete with Netflix. But with this platform they are further positioning themselves as the sole entertainment provider in Africa ... Instead of having separate subscriptions for international streaming services, Netflix and Amazon content will be built into MultiChoice platforms.
How do you see business models evolving in broadcast going forward?
Business models of the future are likely to be geared more directly to the consumer. We may see a convergence of advertising, subscription and rental models over time.
In my opinion, Netflix may start a rental business. They started out with a subscription DVD service where customers could access a number of movies or films each month. That has evolved to monthly payment for unlimited access to their library of online content. A rental option could give them a higher return investment for original content produced.
How can free-to-air players such as e.tv take advantage of digital platforms?
E.tv has the advantage that Africa has underdeveloped internet infrastructure. Add to that the high cost of internet access. Running a TV in the background is not possible yet because of those data costs. Therefore, there is still demand for free-to-air television.
It would be good for e.tv to develop a YouTube model for their service. Free to air, but online. E.tv could have a DStv-Now-like experience, but free. That would allow them to harvest data around real-time viewership of their programming, perhaps even allowing them to test how new content will be received. Catch-up viewing services and more targeted advertising could generate additional revenue.
This is where telecommunications operators could get involved or ultimately dominate. Think about AT&T’s ownership of HBO and Direct TV in the US — that was good long-term thinking. A telecoms company that has cable and online streaming properties, while providing the connectivity for those services.
With digital broadcast and streaming business models evolving, is there still a place for TV licences?
Yes. National broadcasters have a mandate to educate and inform. News, for example, is very difficult for private companies to compile. We rely on national broadcasters to give information and coverage on matters like elections which are in the country’s interest. Additionally, the SABC is a good platform for talk shows, sport and other discussion-based content around national issues.
TV licences also keep national broadcasters independent and not beholden to advertisers. When you think about it, R265 is low compared to other countries. In Germany, where I’m from, citizens pay €65 (about R1,236) per quarter for TV licences. That’s €260 a year!
TV licences are also important because they have essentially been used to pay for and maintain the country’s national video archives. The SABC should be available on all platforms to serve the people — DStv Now, Vodacom Video Play — all of them.
My biggest passion is for the SABC and Telkom to work together, online platform or app. SABC has its own programming and valuable archives, Telkom could provide the connectivity. They could charge a fee for digital distribution of those archives.
The SABC has a big role to play.
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