SABC aspires to take on Netflix, Showmax in OTT space

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SABC CEO Madoda Mxakwe.
SABC CEO Madoda Mxakwe.

The South African Broadcasting Corporation’s (SABC’s) constrained budget will be its biggest undoing, as the public broadcaster looks to take on the likes of Netflix and MultiChoice in the Internet streaming services market.

This is according to analysts after SABC CEO Madoda Mxakwe told a media event that it wasn’t too late for the broadcaster to venture into the over-the-top (OTT) space.

“While we know we are behind on the technology side, the SABC does not intend to leave streaming TV services to our competitors,” said Mxakwe.

“Our SABC News app was the first example of what we can do, combining some television and audio content on a mobile app. We intend to go much further, with the aim of putting all our content on our own streaming service.”

According to Mxakwe, the SABC has developed an integrated OTT strategy with the goal that it develops or acquires its own OTT streaming platform as a medium-term goal.

“This will allow the SABC to control its own destiny into the future. Previous funding challenges and an inquorate board for over five months this year has slowed us down but not stopped our OTT plans.”

The public broadcaster’s OTT push comes as the SABC faces serious financial challenges.

Earlier this month, communications and digital technologies minister Stella Ndabeni-Abrahams announced the SABC will receive a bailout of R3.2 billion from National Treasury.

The minister said R2.1 billion would initially be transferred to the cash-constrained SABC and the broadcaster would get the remaining R1.1 billion once all the bailout conditions were met.

Feasible but unlikely

Mark Walker, IDC associate VP for Sub-Saharan Africa, comments that while the SABC theoretically should have the capability to enter the OTT space from a technical perspective, “it is most unlikely due to lack of budget to secure broadcast rights for top-level shows from international distribution and publication houses.

“The SABC has weak management capability to run a commercial-grade operation in competition to the likes of MultiChoice locally and global players like Netflix,” Walker says.

Nonetheless, he notes that as a source of additional revenue, OTT would be an attractive option for the SABC.

“However, success in a highly competitive market depends heavily on the content that is streamed,” he notes.

“The SABC would need to clearly define target audiences and supply informative, educational and entertaining content to compete effectively. Ideally, being a public broadcaster, the content should reflect local tastes and preferences in local vernacular.”

Mxakwe concurs that the SABC is faced with very well-resourced global and local competitors that have a major head-start on the public broadcaster through technology and content acquisitions.

“But it is also an exciting and historic moment as we have the opportunity to fundamentally address these shortfalls and position the public broadcaster to be sustainable for years to come.”

He added the SABC cannot solve its sustainability issue without making sure it future-proofs the organisation from a technology and platform point of view. “Sustainability of the public broadcaster may seem like a pipe dream to some, but it is a very real, necessary and achievable goal for the board and management.”

All about content

Arthur Goldstuck, MD of World Wide Worx, is of the view that the streaming business is all about content.

“The SABC does not have the quality or range of international content that Netflix or Showmax claim, and its rights to movies tend to lag far behind the two major players in this market.

“However, it has a vast catalogue of indigenous content, and there is still a massive market for that. The challenge is to match the content to the access means of the typical audiences for this content.”

OTT is a necessary move for the SABC, but at this stage, it is more important for the SABC to sort out its business model, its relationships with production houses, and the quality of its content, Goldstuck says.

“The vast majority of its audience does not have fixed-line broadband, and will not have it for a good few years to come, so entering the streaming market at this stage should be geared towards learning the ropes, understanding what works and does not, and how its audience accesses content.”

Goldstuck notes that at the upper end of the market, streaming services are eating rapidly into DStv's premium package, and have probably reached the half-million mark.

“Netflix is dominant, due to its massive roster of originals and the binge-watching appeal of its series catalogue. However, Showmax has rights to HBO content, which has given it the likes of Game of Thrones and Silicon Valley. With the sixth season of Silicon Valley as well as a much-anticipated new series, His Dark Materials, coming up, it will be able to compete aggressively with Netflix. SABC has very little ammunition against this kind of firepower.”

Digital migration

According to Mxakwe, independent television producers, in particular smaller and emerging players, have been badly hit by two factors – the SABC’s financial and liquidity crisis, and the delay in digital migration and consequent delay in the launch of new television channels for digital terrestrial television (DTT), direct to home (DTH) satellite and OTT platforms.

“Without money and a critical mass of viewers across digital platforms, the SABC has not been able to increase the number of new channels launched and the amount of new television content commissioned. As we speak…there are currently still nearly four million analogue-only TV households who need to migrate to digital.

“The SABC is determined to play a more central and more ethical leadership role in making sure digital migration happens and full analogue switch-off can take place sooner rather than later.”

In this light, he believes satellite has significant advantages over the current DTT network and, therefore, the SABC’s turnaround plan envisages a far greater deployment via satellite.

“Worldwide, broadcasters are migrating to online streaming and DTH and there is an international trend to move away from DTT in some territories. However, South Africa’s policy and DTT regulations limit the SABC’s ability to migrate more fully to DTH and the SABC has taken this issue up with both government and the regulator as a pressing matter,” he said.

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