OTT innovation urged ahead of Disney+, Apple TV+ launch

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The impending launch of Apple TV+ and Disney+ may spell disaster for local over-the-top (OTT) service providers but will procure compelling content.

This is according to Nozi Dikgale, a researcher and media analyst at Africa Analysis.

According to Digital TV Research’s Sub-Saharan Africa OTT TV and video forecasts (January 2019), SA is the biggest video OTT market on the continent, and accounts for 40% of the Sub-Saharan Africa market.

The research predicts OTT video revenue in SA will experience a compound annual growth rate of 28% between 2018 and 2024 – up from $116 million in 2018, to $408 million in 2024.

Dikgale says Disney+ will pose a significant threat to some of the global OTT video service providers in the markets in which it plans to premier its services.

“In the local market, the impact will be evident once the service launches, Disney+ positions itself as a storyteller and the significant in-house content library sets it apart from other services,” she says.

Dikgale notes that in order for OTT video service providers to remain sustainable and profitable, they require strong financial backing to acquire compelling content even though it is expensive.

“To add to the woes of local OTT VOD [video on demand] service providers, two OTT video services, Apple TV+ and Disney+, are set to launch in November this year. Apple TV+ will launch in more than 100 countries on 1 November, including SA. Disney+ will launch in the US in November as well, and plans to premier its service in SA in 2021.”

However, Dikgale believes when it launches, Apple TV+ plans to feature a limited amount of content and will not likely have a significant impact on the South African market initially.

According to the analyst, customers are willing to pay for premium content and content that resonates with them, and when Apple TV+ launches, it will not offer licensed content.

“This is likely to affect the size of its content library and it will offer less content than its major competitors in SA, which may impact subscriber uptake.”

Dikgale says locally, current and future OTT video service providers need to find innovative ways to keep their competitive-edge by attracting, and retaining, subscribers.

“When the majority of South Africans can afford mobile broadband, there will likely be an increase in the number of people connected to the Internet. As a result, more people may access video content online and some will probably subscribe to these OTT video services,” she notes.

The first OTT video service in SA was launched five years ago.

Since then, Amazon Prime Video, Cell C Black, Discover Digital, Netflix, Showmax, Telkom LIT and Vodacom Video Play have become household names in the space.

Between 2015 and 2019, five players – Altech Node, Kwesé Play, MTN VU (formerly FrontRow), ONTap TV and Times Media’s VIDI – exited the OTT video market.

According to Dikgale, the growth of broadband (both mobile and fixed) and an increased number of connected smart devices (smartphones, PCs and tablets) are the main growth drivers of OTT video services in SA.

Conversely, she says: “The high data costs in SA create barriers to the adoption of OTT video services; so does lack of Internet access in some parts of SA, particularly in rural or remote areas.

“The adoption of OTT video services in remote areas will pick up at a slower pace than in metro areas. Some of the growth inhibitors of these services have been slow uptake of the services and lack of financial backing, resulting in some services ceasing to operate.”

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