The prepaid model is proving to be a silver lining for SA's struggling pay-television operator, TopTV.
The company says its prepaid payment voucher - launched about three months ago - is proving "extremely popular". TopTV says it has sold close to 70 000 vouchers on consignment to a number of its distribution partners, and has been activating over 500 prepaid vouchers daily over recent weeks.
Eddie Mbalo, TopTV's interim CEO since February, believes this is only the start of the product's success. "Considering the majority of national retailers will only start selling the vouchers in late November, [and] the high number of repeat purchases, it is clear that the best is yet to come."
This comes about a week after the company announced it was seeking a "business rescue" as part of its proactive bid to protect the company. Mbalo said at the time that the measure would form a "protective bubble" around the company while it sought a strategic equity partner. "We are taking precautionary measures and being prudent with our current cash reserves [and] the board has taken this decision to ensure the long-term sustainability and growth of the company," said Mbalo.
Market disruptor
TopTV launched in May 2010, entering the South African pay-TV space as the country's second satellite operator - after MultiChoice's DSTV service (launched in 1995). The two-and-a-half years since then have seen TopTV clinging to runner-up status as the company has struggled to make inroads in the industry, and has had to deal with a dwindling customer base, loss of third-party channels, and a controversial attempt to launch adult services that went belly up.
But Mbalo remains optimistic and says TopTV (owned by On Digital Media) is a "bold and innovative" company. He says the pay-TV operator prides itself on being a "market disruptor".
"The recent successful launch of the prepaid product as part of our ubiquitous payment platform was a first for pay-TV in the country, and is already making a significant impact in promoting access to pay-TV for South Africans.
"Based on this success, we are in the process of launching a number of exciting complementary products over the next few months, as our presence is secured in more major retailers countrywide."
Prepaid boon
Mbalo says the prepaid model has, to a degree, been a saving grace for the company. "We are able to grow the business without increasing the administrative burden - that's important, because it allows us to contain costs."
He says prepaid may be the business model TopTV will employ to make its mark on the South African market. "We believe that we have now found the right business model: one based on flexibility and that understands the current realities of doing business in SA, where many South Africans are unbanked and financially excluded."
TopTV says one of its objectives with prepaid was to entice lapsed or dormant subscribers to reconnect to the service. As of August, 400 000 decoders were installed in households, but only on average 150 000 active paying subscribers each month.
Mbalo says, of the prepaid vouchers that have been sold and activated, almost 65% have been activated by customers whose subscription had either lapsed or been disconnected.
Kgomotso Lekola, TopTV's interim COO, says: "Some interesting stats are emerging regarding who our prepaid customers are, and their TopTV subscription history. Of the current activations, 26% are new, first-time subscribers who have signed up to the service within the past three months, since prepaid was launched. Another 26% originally subscribed to the service when TopTV launched and 23% of current active subscribers, who were paying previously via debit order, Easy Pay or cash each month, have also opted for the prepaid system."
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