The television market in SA is in transition, considering the current technological climate, and the development of pay-TV has played a bigger role in the past year than before.
Last year saw pay-TV subscription households increase by about 600 000, the largest single-year increase in South African history. The overall TV market grew by 18.8% over this period, the largest increase SA has seen over the last five years.
These statistics, among other markers and projections, are contained in the recently released second annual edition of PricewaterhouseCoopers' (PwC) South African entertainment and media outlook report (the Outlook), which covers the forecast period of 2011 to 2015.
New competition
The Outlook observes that the market has recently seen a considerable amount of new competition emerging in the pay-TV subscription sector.
TopTV, the television subscription service provided by On Digital Media (ODM), launched in May 2010, with 55 channels. By the end of the year, just months after coming to market, TopTV had reportedly attracted approximately 200 000 subscribers.
MultiChoice expanded its satellite offering with the launch of DSTV Compact, adding about 375 000 new subscribers in 2010.
At the high end of the market, enhanced viewing experiences have been introduced with high-definition (HD) technology and the DSTV-on-demand service offering.
The report predicts that competition in this market will continue to increase even further in 2011, with new technologies and product offerings entering the market. “We project an approximate 550 000 additional subscribers overall in 2011.”
Local content
Another reflection in the report is that quality local content is becoming increasingly important for the pay-TV market.
While technology is patently important in the industry, content is still a primary concern for TV operators. According to the report, sport, in particular, tops the list for pay-TV providers. It marks that sports coverage and sporting broadcasts still underpin subscription services.
“Another source of high-quality, original content that is expected to underpin continued subscriber growth is movies, and they should maintain their status as a key point of difference for subscription TV.”
The Outlook notes that, while overseas drama will remain a mainstay in the programming schedule, South African content will be of increasing importance.
Add-on services
HD viewing continued to attract high-end consumers during 2010.
“The availability of more clarity on television sets and the emergence of LED screen technology have meant that even more emphasis is being placed on the HD offering.”
It is expected that HD will continue to draw high-end consumers and that more channels will be added in the near future.
The personal recording service (PVR) decoder - from DSTV - was refined in 2010 with the introduction of a more compact version, and continues to attract consumers, says the Outlook. It further states that TopTV is expected to launch a PVR option to the market in the near future.
DSTV also launched DSTV-on-demand, which enables subscribers to view a library of the most recent, popular programming even if not recorded manually.
Pay-TV prognosis
In conclusion, the report says the overall number of subscription households is expected to increase from 3 million in 2010 to a projected 4.75 million by 2015. This constitutes a 9.6% compound annual increase. “Subscription household penetration will reach 66% in 2015 from 43.2% in 2010.”
During the past two years, subscription spending generated a massive 92% of total television growth.
“We expect new services and improving economic conditions to continue to fuel subscription spending, which we project will increase at a 12% compound annual rate to reach R17.1 billion in 2015, up from R9.7 billion in 2010.”
With other entities wanting to get a piece of the pay-TV pie, there will inevitably be newcomers to the market in the coming years, but the report notes that digital terrestrial television, which will largely be free, will also have significant appeal.
“This will cut into subscription household growth during the latter part of the forecast period. We expect overall subscription household growth to drop to mid-single-digit levels during
2014-15.”
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