Technology

Kenya pay-TV market gears up for price battle

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The pay- TV landscape has changed and DSTV, which has enjoyed a smooth ride, is braced for a tough battle. File

The race to control Kenya’s pay-TV market is expected to intensify after today’s launch of Smart TV, setting the stage for a price war.
Next Generation Broadcasting AB (NGB), a Swedish firm, is launching the pay- TV station in a market that has been growing marginally due to high pricing, poor content and distribution models.

South Africa-based DSTV, which has enjoyed a near-competition-free environment over the last 15 years it has been in Kenya, two weeks ago cut its access prices to Sh5,000, and a monthly subscription starting from Sh830, bringing it at par with the new entrant.

Wananchi Group, which runs cable Zuku TV, has increased activity after the sudden exit of GTV with the introduction of a Sh1.5 billion content development division known as the Wananchi Programming Group (WPG).

Early this year a Dubai-based satellite and terrestrial receivers manufacturer Remember TV launched its pay- TV channel dubbed My TV, targeting the mass market in Kenya.

Huge potential

However, the entry of Smart TV could be the game-changer for the segment as it comes with price-sensitive products at a time when the local television landscape is preparing to enter the digital era, expected to be completed by 2012.

Smart TV subscribers will pay Sh 5,000 to receive a subscription bouquet of eight channels covering news, entertainment, sports, kids content and gossip.

“There is a huge potential out there for pay TV channels that has remained untapped due to prohibitive entry prices. The question has not been how much they pay monthly subscriptions but how much it is to acquire the set up equipment,” said Daniel Kagwe, CEO NGB Kenya.

Mr Kagwe said under Smart TV, an initial Sh5,000 for set top box was enough, adding it functions on the normal TV aerial. Monthly subscriptions are Sh990, says the company that has similar operations in Ghana and Uganda offering both post and prepaid digital terrestrial TV services.
The DSTV offer includes 35 channels, a satellite dish, a decoder, a smart card and a cable. A user is required to pay a six-month access subscription fee in advance, bringing the total minimum entry to about Sh10,000.

DSTV has four content packages: Premium (Sh6,350) per month, Compact Plus (Sh4,000), Compact (Sh2,350) and Family which costs Sh1,700 per month.

NGB, says it has finalised the project set up process after testing their frequencies since June this year.

Smart TV will be using the Kenya Broadcasting Corporation’s digital platform to reach its customers.

“We have finalised agreements with a host of local and international channels that will be part of our pay TV offering to enable us to launch it commercially. We have a clear signal and consumers can now go and buy the set top boxes,” said Mr Kagwe.

He said there will be free viewing until the end of the year, “a period we believe is long enough for them to sample our channels and give us feedback on our content and quality.”

NGB Kenya customers, just like its main competitor DSTV, will access all the free-to-air channels such as KBC, NTV, KTN, STV, Citizen TV, Family TV and K24 among others in digital quality “without the need for a satellite dish or an extra set top box.”

The pay TV providers are also eyeing the process of migration to digital platform by local broadcasters as another key factor in getting hold of customers.

Industry regulator, Communications Commission of Kenya (CCK), has set a 2012 deadline for the migration from analogue to digital broadcasting after which analogue switches off. The world deadline is 2015 as set by International Telecommunication Union (ITU).

Under the new digital broadcasting regime, KBC will assume the role of digital television signal distributor — carrying broadcasting digital signals for other broadcasters — through its recently established division, Signet.

CCK has more than 60 TV and 150 radio licence applications pending due to a lack of analogue frequencies.

Digital broadcasting is expected to remove this bottle-neck through efficiency in spectrum usage that allows more channels for each frequency.

Digital signals

To be able to receive the digital signals, Kenyans will have to either use set top boxes that convert analogue signals to digital signals for reception by the TV sets or acquire digital TV sets. The latter option has been considered too costly for most of Kenyan households.

Most of the pay- TV providers are betting on their digital compatibility platform to grow consumer numbers since a user will be exempted from buying the set top boxes once they purchase a pay- TV package.

Digital broadcasting is also expected to lower the entry barriers for investors as well as increase access to frequencies.

Kenya has over 18 commercial free-to-air television stations, and has in excess of 60 FM radio stations and five pay- TV providers.

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