Times Media Group, a South African Media and Entertainment company (until 2012 known as Avusa), has launched a subscription VoD service called VIDI in South Africa. Launched on the 10th of September 2014, VIDI offers consumers the option of accessing a library of videos for a monthly subscription costing Rand 140 (equivalent to €10.50) or –alternatively- the renting of new release movies from Rand 27 (€2) and library titles for Rand 15 (€1.05) each.
The SVoD service is available via PC or Mac, on Apple and Android smartphones and tablets and will soon be available on connected TVs. The company has disclosed that it offers over 1,000 hours of entertainment, having inked deals with content providers including Disney’s ABC Studios for older TV series like Grey’s Anatomy, Cougar Town, Lost, Brothers and Sisters. The VIDI service is offering 21 TV series at launch as well as 100 films from studios like Warner Bros, Sony, Disney, Lionsgate and Relativity.
Videos will be available in SD or HD (content permitting). VIDI will use Microsoft Silverlight as its player technology.
The launch of a new SVoD service in South Africa is a clear indication that the OTT market in the country is starting to look promising. South Africa’s dominant pay TV operator, Naspers-controlled Multichoice, was the first company to launch a pay OTT service in the country: DStv BoxOffice Online was launched in July 2011 as a separate service to accompany the PVR-based DStv BoxOffice service. The cost of renting a movie is 27 Rand (equivalent to €2) and the service managed to attract roughly 529,000 movie rentals per month in 1Q2014. DStv has also invested in the development of apps providing its DStv Premium package’ subscribers with the option to enjoy premium content like sports “anytime, anywhere” through a broadband connection: DStv enables the live streaming of sports events through the Supersport app which is available on iTunes. The app can run on any Android- supporting device as well as on iPads and iPhones.
OTT services have been also launched by FTA operators like e.tv. The commercial FTA broadcaster launched its e on Demand service in June 2013. The service requires users to register online (at the www.etv.co.za website) free of charge to get access to a variety of locally-produced TV shows and series (as part of a catch-up TV service). The OTT service provides the opportunity for e.tv to enhance its brand loyalty especially with younger more computer-literate demographics as well as to capture new viewers. The South African incumbent telco, Telkom, is also examining providing a VoD service to its fixed-line clients. Sentech, the national DTT network operator, has also demonstrated a keen interest in OTT content delivery: at the end of July 2014 reports in the South African Media disclosed that Sentech is planning the creation of an OTT content distribution platform. According to the reports, Sentech intends to develop a multi-screen content distribution and management network service that will offer content to a multitude of devices including tablets, smartphones and PCs. Finally, Naspers-owned analogue pay TV operator M-Net, has also been linked to a possible SVoD service launch. Further details have not been disclosed but IHS believes that the new SVoD service will be PVR-based and will launch in conjunction with the roll-out of commercial DTT in the country either in late 2014 or first half of 2015.
VIDI arrives at a point in time at which roughly one fifth of South African households subscribe to a home broadband service – nearly 3 million homes. Broadband speeds are also increasing – content delivery network Akamai indicates that by the end of 1Q2014, the average broadband connection in South Africa supported speeds of over 2.5 Mbps – easily capable of allowing users to stream video. Connections capable of streaming HD video represented roughly 10% of South Africa’s broadband connections.
VIDI’s support of connected devices will be critical to local success – best practice in the online streaming space is exemplified by services such as Netflix and the BBC, which both support a multitude of different devices- contributing to their local success.
But video services ultimately rise and fall on their content catalogues, and at present VIDI has acquired a relatively small number of TV shows for the purpose of supporting its subscription service. While subscription VoD services are notoriously difficult to support as profitable ventures due to the high costs of acquiring rights, and the front-loaded nature of subscription rights deals, underinvestment in content makes it more likely that consumers’ first perception of a service will be poor - and will ultimately hamper uptake.
Transactional VoD – film rental – is also a challenging sell to consumers. Although rental prices are relatively low in South Africa compared to Europe and North America, it is often difficult for services to gain a foothold unless they or their parent groups own devices or operating devices - companies such as Apple, Microsoft, Google and Sony typically lead the sector as a consequence of this. However, at launch, VIDI has priced new release movies (like The Lego Movie, Gravity, Maleficent, American Hustle, Twelve Years a Slave) at roughly 30% lower than iTunes (Rand27 versus Rand35), which will give VIDI an advantage when competing for consumers.
And ultimately, as Netflix has shown, a combination of strong marketing, good quality of service, the right pricepoint and a sufficient number of supported connected devices, can all sum up to a strong performance – even without the latest rights.