Mobile operators poised to drive OTT in Africa
Mobile operators can play a significant role in driving over-the-top (OTT) services on the African continent.
This is according to a report by market research firm Dataxis, which reveals the wider adoption of OTT services on the continent remains handicapped by the lack of internet connectivity.
Dataxis believes that by partnering with mobile operators, streaming platforms can offer packages that include both a subscription plan and data at low cost and with a simplified payment method, since everything is reconciled on the mobile bill.
As an example, the market analyst firm cites last month’s partnership between South African mobile operator MTN and US-based steamer Disney+.
The companies joined forces to launch a mobile plan for Disney+ in South Africa, whereby MTN offers a bundle to its customers who sign up, at the cost of R49.
However, Dataxis notes that while a year ago, Vodacom’s Video Play platform appeared to be a great success, its closure at the end of 2022 called into question the ability of mobile operators to sustain competitive and profitable platforms.
“Then, how far can telecoms operators be involved in the OTT market?” asks Léa Zouein, analyst at Dataxis.
According to the firm, the paying OTT market is growing steadily in the region, as the number of OTT services subscribers grew by 22% between 2021 and 2022, and is expected to increase by 62% by 2028.
“And yet, while in 2022, less than 5% of households were connected to fixed broadband and only 1% to fibre, mobile internet had a population penetration rate of about 45%,” Zouein says.
“Not only is mobile internet more accessible, but owning a smartphone is also becoming more common, as shown by the population penetration rates in a range of countries, including South Africa (65.73%) in 2022, Kenya (51%) and Burkina Faso (46%),” she adds.
Dataxis points out that several telecoms operators have chosen to launch their own OTT platforms to tackle the connectivity issue faced by streamers, while attracting digital video viewers.
For instance, it states, at the end of 2022, the Nigerian 9mobile launched 9TV. The Kenyan Safaricom launched BAZE in 2021.
“Although the number of mobile operator platforms is multiplying in the region, the number of subscribers hardly follows the same trend,” Zouein observes.
In the first quarter of 2023, she says, only 12% of total paying OTT subscribers chose standalone mobile operator video services.
“The low market share penetration of telecoms operators’ platforms reflects the limits of such projects. The shutdown of Telkom One in November 2020, just after the company announced growth that exceeded expectations, is evidence of the difficulty of penetrating the OTT market, still largely controlled by clear leaders: the American Netflix and the South African Showmax.”
MTN has made digital one of its main areas of development and is investing on all fronts in terms of OTT, says Dataxis.
It adds that with 22% of the mobile internet market in the region, the operator has the largest potential audience.
Since 2017, the firm notes, the group has launched several OTT platforms in various Sub-Saharan African (SSA) countries: Y’ello Video+ Benin, Y’ello TV in Rwanda or Guinea, or Yabadoo in Nigeria.
“Following the closure of its first SVOD [subscription video-on-demand] platform Vu in 2017 after three years of service, MTN is trying again with a different offering – local and international films and series, as well as live TV channels,” Zouein says.
She points out that the steady arrival of these platforms in the different markets − the latest being MTN TV+ in South Sudan in January 2023 − suggests there is a real demand to be met.
However, she believes the challenge is to provide the most relevant content, whether local or international, with an easy-to-use interface and effective tools, to make the customer journey unique in terms of content recommendation and discovery.
MTN takes charge
Alongside these offers, the South African group is the most active in the region, with 11 active partnerships across Sub-Saharan Africa − including Wi-Flix, which already has partnerships with MTN Ghana (late 2020), MTN Nigeria (May 2021) and MTN Zambia (May 2023), the market analyst firm reveals.
Other streaming services partnered with the operator across the region, such as Showmax in Nigeria and South Africa, and Molotov in Ivory Coast.
“It rounds out its offer with an Entertainment Pass in South Africa that lets users choose from a list of platforms divided into different data packages: Showmax, DStv Now and above all YouTube. After all, MTN should not focus only on partnerships with paying platforms, but also on platforms that offer freemium content,” Zouein notes.
According to Dataxis, in Q1 2023, YouTube alone accounted for 75% of advertisement-based video-on-demand (AVOD) monthly active users in SSA, or around 30% of the total population of the region.
It explains that offering data plans for these AVOD platforms is a way of extending its influence even further.
“Mobile operators are therefore a powerful gateway for platforms to reach more consumers. As long as fixed broadband does not develop further in the region, mobile remains the preferred device for accessing content,” says Zouein.
“Thus, operators have a card to play to reach the largest audience possible, already largely captured by their mobile offers. However, to reach this objective given the monetisation challenge faced in the region, operators might have to bet on accessible streaming models and start relying more broadly on free ad-supported video.”