MultiChoice owners bet on millennials, local content with new pay-TV platform

MultiChoice owners Naspers are employing a two-pronged approach in their latest offensive in the Kenyan pay-television market by focusing on the millennials and including local content on its ShowMax platform.

Targeting the entry and premium end of the market, ShowMax, which is a subscription video-on-demand (VOD) service, has made available two subscription packages: Select, priced at Sh330 and Premium at Sh880 monthly.

ShowMax says VOD service, which will be available on smartphones, tablets, computers, and smart TVs, will test the limits of “traditional pay-TV”.
“It will cannibalise traditional payTV because the millennials want a different kind of experience from the conventional,” said ShowMax CEO John Kotsaftis.

Mr Kotsaftis assessment dovetails with what David Maina told the Business Daily about his TV viewing changing immediately the Internet video streaming service Netflix entered Kenya early in the year.

He dropped his pay-TV subscription and signed up for unlimited Internet to get Netflix content. ShowMax, which has been operating in the country since May, has taken on the offensive by allowing for M-Pesa payments on its platform.

Mobile

“Kenya has all the right ingredients: tech-savvy consumers, rapidly expanding Internet connectivity, and an appetite for quality TV shows and movies,” said Mr Kotsaftis.

The Showmax Select package is a mobile-first, data optimised product that offers reduced data consumption and has a specific focus on local content. “ShowMax is the first international internet TV service that is priced in Kenya shillings and paid for using M-Pesa. It is the first to be optimised for mobile usage, reducing data consumption by as much as 75 per cent,” said Mr Kotsaftis.

Both ‘Select’ and ‘Premium’ allow subscribers to either stream content or to download up to 25 shows to watch offline for 30 days. Data usage is charged separately and works with a customer’s data bundles.

Subscribers can choose from a number of different download video quality levels. Downloading a 20-minute TV show will use approximately 80MBs. This means that a 7.5GB data bundle would be enough for more than 90 episodes.

The switch from analogue to digital television viewing had providers scrambling to capture consumers who were looking for alternatives to free-to-air channels. Data from the Communications Authority of Kenya show that the number of digital set top boxes bought in the financial year 2015/2016 stood at 3,043,944 for pay-TV and 95,493 for cable TV.

This coupled with the growing Internet penetration and usage has given Over The Top (OTT) technology firms a market ripe for the picking. The technology has placed products and services in the hands of consumers, from hailing a cab to watching favourite shows from mobile devices.

In the data segment, subscriptions rose by 8.2 per cent to 26.8 million during the last quarter up from 24.8 million subscriptions recorded in the previous quarter. This represents an increase of 35 per cent compared to the 19.9 million subscriptions the previous year.

Internet users are estimated to have grown from 37.4 million to 37.7 million in the last quarter.  Internet penetration, however, declined from 87.2 per to 85.3 per cent, what is attributed to the revision of the base population figure used from 43 million to 44.2 million according to the Economic Survey 2016.

Ratings

ShowMax and Netflix, which offers unlimited access to movies, documentaries and series at monthly rates of between Sh815 and Sh1,222, have significantly lower fee than the rate cards of Kenyan pay-TV firms Wananchi Group and MultiChoice.

Netflix, whose high uptake in the US has hit audience ratings and slashed advertising revenues for cable and satellite channels, already has about 74 million subscribers mainly in the US and Europe.

GOtv, a subsidiary of Multichoice Kenya, reversed the May price increase on one of its tariff plans — GOtv Value — and made a similar tariff slash on its GOtv Lite package in August.

Chinese pay television provider, Star Times, reduced its monthly subscription fees and connection charges on its home satellite service. The pay-TV company cut monthly subscription fees for its two premier pay television bouquets by up to 40 per cent in March.

MultiChoice froze its annual subscription fees as rivalry from new market entrants stepped up. It has also made available the Barclays Premier League (EPL), La Liga and the Euro 2016 at no extra cost on its DStv compact bouquet.

African Digital Consortium (ADN), Pan-Africa Network Group, Bamba TV, KBC (Signet) and Zuku are more affordable services.

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