SA boasts the most developed pay-TV market compared to Nigeria and Kenya. However, triple-play services are relatively under-developed in the Southern African country.
This is the main takeaway from Frost & Sullivan's "Pay-TV, Video-on-Demand, and IPTV Growth Opportunities in Africa" report which studies the South African, Nigerian and Kenyan markets.
According to the market analyst firm, the pay-TV, video-on-demand (VOD), and Internet Protocol television (IPTV) services market is growing rapidly as significant Internet penetration and smartphone adoption in Africa alter the manner in which consumers view content.
It notes growth will be augmented by the availability of cheaper digital terrestrial television services, data-saving video consumption options and attractively packaged triple-play services.
According to Frost & Sullivan, MultiChoice DStv and GOtv, and StarTimes are among the leading pan-African pay-TV operators, while IROKOtv, ShowMax and Netflix lead the VOD space. It points out that despite DStv's dominance, SA has the most developed pay-TV market, whereas triple-play services are more developed in Kenya.
The firm anticipates high growth in the use of VOD services in SA, due to the increasing popularity of ShowMax and Netflix.
It points out that partnerships between pay-TV operators and telecommunication companies are expected to gain traction as this extends the reach of pay-TV services, while enabling telecommunication service providers to capture new revenue streams.
For instance, it notes, Vodacom is looking to partner with MultiChoice and attract customers by offering a fixed price to download content on a subscriber's mobile device rather than billing per megabyte.
The analyst firm also notes operators like MTN, Vodacom and Telkom have been deliberating over the launch of IPTV services. Vodacom has been conducting trials to roll out IPTV services in Pretoria, while Telkom is looking at exploring potential partnerships with existing subscription TV providers.
Cell C also plans to launch its own VOD platform, using its new online reality show, #BreakTheNet, as a test case.
Frost & Sullivan adds that Africa's large population and demographics make it a highly attractive market for new and existing participants.
"It is critical for market participants to gauge viewership trends, price sensitivity and technical requirements while offering their services," says Deepti Dhinakaran, Frost & Sullivan's digital transformation research analyst.
"In terms of pricing and richness of content, strategic partnerships will be crucial in defining the market leader in the next five years."
However, Frost & Sullivan says pay-TV, VOD and IPTV growth opportunities in Africa are hindered by spiralling cost of operations, primarily due to international currency requirements, slow download speed and high costs of Internet access.
To overcome these challenges, the analyst firm says providers are trying to achieve economies of scale by expanding across the continent and partnering with mobile operators. It believes this will enable subscribers to access content through a small monthly subscription fee while minimising data costs for operators and subscribers.
It points out that innovative pay-TV and VOD providers such as StarTimes, MultiChoice, iROKOtv, Ericsson, Zuku, MTN and Safaricom are prioritising their content strategy according to the preferences of their subscribers, while offering services across multiple platforms such as Web sites, mobile apps and other partner platforms.
"The market shows huge opportunity for 'value-for-money' services, especially in South Africa, from providers that offer the right mix of content at a competitive price with a sophisticated, user-friendly interface. Service segments such as triple-play and IPTV services have a high growth potential," says Dhinakaran.
Share