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It's satellite vs online in VOD race

Martin Czernowalow
By Martin Czernowalow, Contributor.
Johannesburg, 19 Sept 2014
South Africa's appetite for video content is at an all-time high.
South Africa's appetite for video content is at an all-time high.

With Altech's foray into the local video-on-demand (VOD) market, competition in this space is ramping up fast, with market observers arguing South Africa is entering the "golden age" of content delivery.

Altech's Node offering comes barely a week after the Times Media Group unveiled its VOD online content streaming offering, dubbed Vidi, and both offerings are set to go head-to-head with the current incumbent, MultiChoice-owned DStv.

These new offerings also come at a time when South Africa's growing appetite for video content is becoming increasingly evident. The latest social media study - conducted by World Wide Worx and Fuseware - shows that although Facebook remains the country's leading social media platform, YouTube has taken second place, beating out Twitter and Mxit.

According to the study, the Google-owned video content platform has seen its South African monthly active users surge by 53% from last year - totalling 7.2 million, compared to Facebook's 11.8 million active monthly users.

It is against this backdrop that market analysts predict a slew of new entrants to crop up in the VOD space in the near future.

While both the Vidi and Node offerings are seen as services that could potentially put a dent in DStv's market of almost five million subscribers, both offerings are vastly different and come with their own share of pros and cons.

Vidi is a more traditional online streaming entertainment offering, allowing viewers to watch Vidi content on any device that can stream content, including PC, Apple Mac, laptop, Apple and Android tablets and smartphones. While the service enables streaming off connections as low as 1Mbps, pundits note the Vidi's Achilles heel is arguably its reliance on SA's expensive and often unreliable bandwidth connectivity.

Meanwhile, Altech seems to have a way of side-stepping the bandwidth issue by going the satellite streaming route, and has added smart home and e-commerce functionality to the Node. However, its appeal could be constrained by limited satellite coverage and the fact that it lacks multi-device streaming capabilities.

Side-stepping bandwidth

ICT veteran Adrian Schofield feels that, overall, Altech got it right. "It definitely allows them to get away from the uncertainty of streaming across the terrestrial network, which allows for a better quality of service."

Schofield says both the Vidi and Node offerings will compete against DStv, especially among viewers who feel the R740 premier subscription for MultiChoice's service is too expensive. In comparison, the Node requires a monthly subscription fee of R299, while Vidi comes in at R149.

"But the matter of bandwidth connectivity is potentially a killer for Vidi. Even high-speed networks are unreliable in South Africa, and subject to interruptions, especially when your Internet service provider decides to dig up the pavement," he says.

"On the other hand, satellite is very reliable, but ultimately it will be content that plays a huge role in the popularity of the new players." Schofield points out that whereas both newcomers are naturally chasing quick results and offering high-interest movies and series, they may struggle against DStv's sport, news and documentary content.

He adds it is unlikely the Node's smart home capabilities and e-commerce functionality will be huge differentiators, as people are not used to being "anchored" to their living rooms to make use of smart home solutions. "But the Node has a lot of potential, and satellite seems to be the way to go in South Africa, at least until government resolves the spectrum issue."

More to come

World Wide Worx MD Arthur Goldstuck has high praise for Node, saying the built-in smart technology makes it a "gateway" console that will enable Altech to push its own services to users.

Goldstuck admits satellite streaming is a good way to go, but points out that not all areas have satellite coverage. In this context, he says it is admirable that DStv has managed to grow its market share to nearly five million households in SA.

In terms of the Vidi offering, Goldstuck says it has two clear advantages: it is capable of streaming to any device and its quality is dictated by the quality of the Internet connection - which means even users with slow connections can use the services, albeit at a lower quality.

"Our recent social media study shows there is a massive appetite for video content in SA. You could say we are entering the golden age of content delivery," he says, adding that more competitors are expected to enter this space in the near future.

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