Times Media Group's video-on-demand (VOD) service, VIDI, has shut down - the first smaller VOD player to do so in an increasingly competitive space.
There has been no official statement from VIDI, but its Web site states: "VIDI is transforming, watch this space for coming details," followed by: "VIDI video-on-demand is NOT available after 26 January 2016."
In September 2014, when VIDI was launched, it cost R149 per month for an unlimited subscription to a library of movies and TV series - or between R15 and R27 for on-demand content.
However, within the last year, Naspers launched streaming service ShowMax at R99 a month for more than five times the amount of content. In January, international VOD service Netflix launched in 130 countries worldwide - including South Africa.
This year has also seen the arrival of Future TV, which offers access to 34 international streaming providers, via TV decoder.
Clinton Jacobs, senior IT analyst at BMI-TechKnowledge, says: "A lesson I think is that your value proposition has to include more than a back catalogue. The incumbents at MultiChoice are not sitting on their laurels, but constantly offering new DSTV offerings as well as their own VOD offering.
"I also think the addressable market is smaller than many think as the consumer's discretionary spend is under pressure as there are two costs involved: the subscription and the data cost."
Content game
Brian Neilson, director at BMI-TechKnowledge and a previous VIDI subscriber, says: "For me, the extent of the offering is the main thing, especially for those who already have an uncapped Internet account. ShowMax seems to have one of the broadest offerings in South Africa. Perhaps I am fussy but I only watched one series on VIDI and then found nothing else that I really wanted to watch."
"It's not whether there's room in the market, but whether they can carve out a place for themselves in the market. OnTapTV is unlikely to be around in its current form next year this time, and MTN's VU may also evolve or disappear as it fails to take on the big players," says World Wide Worx MD Arthur Goldstuck.
"For now it's a Netflix vs ShowMax arena, but there is no rule that says it has to remain a two-horse race. It's reminiscent of the early days of the Internet in South Africa, when people assumed there was only room for Internet Solutions and UUNET, which evolved into MWeb. Telkom Internet, Vox, Afrihost, Cybersmart and the like wouldn't exist today if we assumed the market was only available to a couple of the biggest players.
"While content rights are probably more complex than connectivity, it is also likely to evolve into a more commoditised arena, which would make life more difficult for bigger players and easier for smaller ones. Inevitably, however, those smaller players will also continue to be gobbled up by the market leaders."
Jacobs says there could be hope for smaller players: "It depends on content, price and how they can address the cost of broadband. The players that can provide data deals such as MTN zero rating data and the agreement between ShowMax and Telkom should influence this."
"VIDI will be missed," says Goldstuck, "Not because so many people used it, but because it offered something different ? a R15 a day option for people who only wanted to use it occasionally. That was perhaps too cheap, but it is also what the market needs in terms of balancing the cost of content with the cost of the data needed to download it, and in terms of understanding people's viewing habits."
Last year, Altron closed its Altech Node business. The Altech Node set-top box, which was unveiled within a week of VIDI, was described as a fully-converged home "gateway" console. The device was Altech's attempt to break into the VOD market, but offered a smart home solution in addition to incorporating smart TV and smart entertainment functionality.
Independent broadcast analyst Kate Skinner said at the time she was not surprised the Node failed because it was trying to play on a playing field that is not friendly to newcomers.
"One of the big problems is that the market in South Africa isn't particularly competitive to launch new products into because the big players have such a strong hold."
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