1. TV & VOD for AFRICA
Deep Dive Session
In partnership with Ericsson
and Balancing Act
2. TABLE OF CONTENT
• Introduction & Overview
• Power Shifts
• Developed vs Developing Paradigm
• Visual Business Models
• Pay TV
• Netflix
• Amazon
• Youtube
• IPTV/Triple Play
• iTunes
2
3. INTRODUCTION3
Thursday, 02 July 2015 This Document is classified as Confidential
There is a rapid change in the TV market in Sub-Saharan Africa. The
change-over to DTT is happening at the same time as VOD offerings
are blossoming in the market. Content, still under developed across the
continent, is struggling with piracy. Those that expect this market to
resemble Europe’s transition from Analog to Digital TV are in for a
surprise as the European (and American) transitions did not happen in
the age of Netflix. The Sub-Saharan Africa experience will see highly
funded international internet offerings competing with local
broadcasters, pushing regulatory boundaries and changing consumer
tastes. The demand for VOD is clear, how the market will shake out, is
not.
This handbook utilizes visual business modeling to explain the different
approaches players have taken in the market to approach VOD. By
visualizing the business model, ecosystem and how the players inter-
relate, a different perspective can be achieved.
4. Analogue FTA
DTT Providers
DTH Providers
IPTV Providers
OTT Players
(incl. Youtube)
Power shift direction
& magnitude
Shift from/to
(weight is velocity)
KEY
Digital migration
copyright &Innovation Consulting
2015
4 POWER SHIFTS
Current market
power
Future market
power
6. 6
Metric Developed World Africa
TVs per household Average 1.5 Average <1
Predominant TV technology LCD (moving from CCFL to
LED and OLED)
CRT (despite energy
consumption – because of
cost)
Pay TV vs FTA Predominantly Pay Predominantly FTA
Payment Methods Subscription & transaction
supported by wide use of
credit cards & online
financial services
Outside of MPESA and few
other mobile financial
services, payment remains
challenging
Distribution DTH, DTT, DVD, Internet Limited DTH, DTT, Internet,
no DVD distribution
Alternative distribution Non-commercial sharing Commercial piracy
Copyright &Innovation Consulting 2015
DEVELOPED VS. DEVELOPING PARADIGMS
13. VALUE PROPOSITION ELEMENTS13
Thursday, 02 July 2015 This Document is classified as Confidential
While by no means exhaustive, this section highlights a number of the
possible choices that have to be made in relation to crafting a value
proposition that would meet the needs, wants and fears of the African
TV & VOD consumer. This section also highlights, as a primer to a
larger conversation, a number of challenges that impact on these value
proposition choices and considerations.
Beginning with the consumer is a good start to avoid falling into the trap
of replicating developed-world business models that are structurally
unable to address the core African market.
More than just choosing a consumer segment, it is important to
understand the needs, wants and fears of that segment – to gain insight
and develop empathy for your consumers – as a starting point for
developing a value proposition and a larger business plan.
14. VALUE PROPOSITION ELEMENTS14
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CUSTOMERS
Entire Country
SEGMENTS
PRICING
STRATEGY
PRICE MODEL
REGIONS Major Cities Selected Major Cities
BusinessesExpatsAchieversCoreYouthFamilies
Market-grab
(Subsidised pricing)
Break-even or
Cost-plus pricing
Niche value
pricing
FEATURES
CONTENT
FEATURES
Local
Intl.
News &
Local IntUGC
Movies
& Shorts
Sport MusicSeries
Docu-
mentary
News
Movies
& Shorts
Sport MusicSeries
Docu-
mentary
Time-based
bundles
Triple play
bundles
Device
bundles
Per
transaction
Delayed
Multi-
device
Live event
streaming
ChannelsVODMobile
Content-
based bundles
FTA Paid-to-Air Subscription
Data excl.
price
Ad-funded
Recom-
mendation
Premium
pricing
15. VALUE PROPOSITION ELEMENTS15
Friday, 03 July 2015 This Document is classified as Confidential
CUSTOMERS
Entire Country
SEGMENTS
REGIONS Major Cities Selected Major Cities
BusinessesExpatsAchieversCoreYouthFamilies
• Challenges with regional distribution in Africa:
Low rural population density
Cultural and linguistic diversity
Low internet, 3G and LTE penetration, and 3G only available in some cities
• Segments:
Affordability is key to accessing core market
Family viewing behavior is changing to multidevice, more personal
experience, which a player would need to account for this when aiming to
capture the home
Business customers are largely restricted to major cities
16. VALUE PROPOSITION ELEMENTS16
Friday, 03 July 2015 This Document is classified as Confidential
FEATURES
CONTENT
FEATURES
Local
Intl.
News &
Local Int
UGC
Movies
& Shorts
Sport MusicSeries
Docu-
mentary
News
Movies
& Shorts
Sport MusicSeries
Docu-
mentary
Delayed
Multi-
device
Live event
streaming
ChannelsVODMobile Recom-
mendation
• Challenges with content in Africa:
International sports rights monopolized by DSTV in most countries
Local content faces scale issue – if one caters to regional diversity, especially in language, markets can be small
Premium international content costs competing with piracy
• Preferences:
Strong local content preference (especially with regard to language)
Shorter format content – series over movies
Premium international content
• Features:
Appetite for linear channels disappearing globally
Live event streaming proves popular predominantly for sports (but content rights remain an issue)
Mobile and multidevice is increasingly important, as trend leans towards personal viewing experience, throughout
user’s day
Delayed downloads useful in 3G and poor connectivity markets, and useful for traffic streamlining for MNO
Research indicates that users prefer download vs. streaming, as they are skeptical about streaming quality
17. VALUE PROPOSITION ELEMENTS17
Friday, 03 July 2015 This Document is classified as Confidential
PRICING
STRATEGY
PRICE MODEL
Market-grab
(Subsidised pricing)
Break-even or
Cost-plus pricing
Niche value
pricing
Time-based
bundles
Triple play
bundles
Device
bundles
Per
transaction
Content-
based bundles
FTA Paid-to-Air Subscription
Data excl.
price
Ad-funded
Premium
pricing
• Pricing strategies:
Premium content and pricing competes with ubiquitous and largely accepted piracy
Market-grab pricing is challenging with high data prices and/ or content rights
Research shows a willingness to pay more than expected (indications of willingness to spend as much as
DTH subscription)
• Price models:
Ad-funded pricing has scale challenge because of regional cultural and language diversity
Subscription model is challenging if targeting core, unbanked market (who predominantly use prepaid
mobile) – there is limited credit card usage and mobile financial services dominated by a few MNOs
Bundling is a good way to obfuscate data pricing and content, but hitting the mark on value perception of
viewers is challenging (as users attach value to content, and don’t think of paying for data)
Price competes with commercial piracy, which has set price-points below levels acceptable by suppliers
18. VALUE PROPOSITION ELEMENTS18
Friday, 03 July 2015 This Document is classified as Confidential
We are a strategic innovation consultancy firm based in Cape Town, South Africa
focusing on Technology, Media and Telecoms sectors in Sub-Saharan Africa.
We guide our clients in their applied strategic innovation – based on creative ideas,
operational expertise and real world insights gained through human centered design
processes and other methodologies.
We help our clients go from idea, to execution and profit.
&INNOVATION CONSULTING
www.andinnovation.com
19. END / THANK YOU
*This Document is classified as Confidential
