The rapid rise of video-on-demand (VoD) presents an opportunity for African telecom operators as well as content producers and distributors to grow their revenues and position themselves at the forefront of an emerging technology that will disrupt multiple industries in years to come.
But to seize this opportunity they must think strategically about how they will balance VoD innovation with defending the economics of their current business models as they transition to the future.
That’s according to Nevo Hadas, director at &Innovation, who was part of a panel that discussed the African VoD market at a half-day executive deep dive in Cape Town yesterday. He says that the African VoD market is gaining traction as growing economies are increasing disposable income, driving both smartphone adoption and data use.
This trend brings with it both threats and opportunities for the continent’s media and telecoms industries, who could lose market share to international OTT players such as Netflix and YouTube in the years to come as the traditional broadcast and physical distribution business models come under threat, says Hadas.
Balancing Act points out in a recent VoD report, legal VoD enables niche content providers to reach a global audience and generate extra revenues. Legal VoD is also one of the best ways for them to sidestep the content pirates, protect and grow their assets. Allowing African content to get cheap, international distribution.
Telecoms players, meanwhile, need to look at how they can meet growing consumer demand for video services in a manner that allows them to optimise usage of limited network capacity and benefit from revenue growth, he adds.
“Consumers, particularly middle-class subscribers with higher ARPUs, are beginning to demanding more than linear broadcast services,” Hadas says.
“The question is which companies will be best positioned to answer their need for services that are based on multimedia digital convergence. Just looking at the massive popularity of VOD services overseas it’s quite clear that it’s about time Africans got them as well.”
Pierre Cloete, EP head of TV and Media at Ericsson RSSA says that the VoD market in Africa is still in its infancy, though the availability (and growing success) of YouTube and Africa-focused VoD players such as iROKOtv and DsTV points to growing demand for video services throughout the continent.
According to research from Balancing Act there are more than 20 emerging VoD platforms related to African content with various differentiators.
YouTube alone gets a massive amount of eyeball time, spurred on by cheaper and better mobile broadband services as well as increasing interest in video entertainment as a result of social media sharing. Balancing Act has identified 35 YouTube channels in Africa that have generated more than 700-million views as of October 2013 from their creation dates.
Despite these early buds of growth, many large African telecoms operators and content owners are taking a slow and steady approach to the market. Many telecoms operators fear the impact that heavy usage of video will have on network capacity while content producers are wary are giving up legacy revenues.
Paul Salvage, Partner at & Innovation says that VoD will be one of the continent’s most exciting business opportunities as the mobile market in Africa continues to grow and fixed-line internet access improves. Mobile data traffic is expected to grow by 12 times by the end of 2018, driven mainly by video.
This is a massive and important growth opportunity for operators who are seen declining voice usage as over-the-top (OTT) services such as WhatsApp eat their revenues. With subscribers demanding access to content anytime and anywhere, operators have an opportunity to create business models that make premium content on a variety of devices across fixed-lines, mobile and the broadcast airwaves.
Says Salvage: “Telecoms service providers, content owners, distributors and broad-casters willing to enter the multi-play and digital TV segments in Africa should consider partnering with VoD players who already have content and technology in place to serve this market.
“Whatever approach they decide to take, they should start by designing VoD products or services around the needs of their subscribers. This is a complex and risky venture, so engaging with an innovation service provider is a good way for them to develop and supplement the innovation capabilities within their own organisations.”
