More than Just Lines on a Map: Best Practices for U.S Bike Routes
Startimes
1. Africa’s StarTimes: “We are here, we will
work with you and we will deliver”
For years, the only real pay-TV story in sub-Saharan
Africa has been the one starring DStv, the satellite
pay-TV platform operated by South African media
giant Naspers. Others have come and gone,
including, most spectacularly, GTV, the over-
ambitious UK-based broadcaster that collapsed in
2009, unable to afford its pricey English Premier
League rights in a continent where only 1 per cent of
households paid for multichannel television.
But times have changed since the fall of GTV and the later implosion of Nigerian pay-TV
platform HiTV which went under after splashing out millions on premium sports rights,
including the Premier League and the Uefa Champions League. Looking back from our
privileged viewpoint of January 2015, the market has evolved almost out of recognition.
The continent’s economies are growing at an enviable rate, pushing millions into a new
middle class. Africans are eager adopters of new technologies and, crucially for pay-TV
operators, fervent sports fans. Close to 30 per cent of the region’s 50 million TV
households now subscribe to pay-TV, thanks to an onslaught of new low-cost services
riding the wave of digital migration - set to become a reality in at least half of the African
Telecommunications Union’s 44 member states by June of this year.
StarTimes, the Chinese technology company, is riding the crest of that wave. Having first
launched in Rwanda in 2007, the platform now has some four million subscribers to its
low-cost digital terrestrial (DTT) and direct-to-home satellite (DTH) pay-TV services across
13 countries, including Nigeria and South Africa, by far the two biggest African pay-TV
markets, and is the fastest-growing digital TV operator in the region. Although its pay-TV
services are relatively new, the company has been active in Africa for over a decade, as a
supplier of DTT set-top boxes and a provider of DTT transmission services, both fixed and
wireless, and is registered in 23 countries, with plans to complete the rollout of pay-TV
services in all of them in the next few years.
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StarTimes has been fortunate to have expanded in Africa at a time of sustained growth,
and it has done that by offering attractive bouquets of channels, both African and
international, at incredibly low prices - in some cases as low as the equivalent of $6 per
month. It’s not the only one, however, to have made its mark on the African landscape: the
Wananchi Group’s Zuku TV has carved out a strong foothold in Kenya, its home market,
and expanded into four other east African countries, while Azam TV, controlled by
Tanzania’s Bakressa conglomerate, is on a similar trajectory. CanalSat Afrique, the Vivendi
Group’s French-language DTH service, has well over 1.2 million subscribers while
Portuguese-language service Zap dominates in Angola and Mozambique. Market leader
DStv has seen the threat of viable competition coming, launching its own low-cost DTT
service, GoTV, in 2011 to capture the its own share of the rising African consumer class.
Increased competition and aggressive marketing, coupled with greater disposable
incomes, has led to a three-fold rise in African pay-TV subscriptions, from five million in
2009 to some 15 million today.
Earlier this month, Sportcal spoke exclusively to Gary Rathbone, the dynamic new head
of sport at StarTimes, about the future of the African sports rights market and the
development of the region’s pay-TV sector, and found that he was sanguine about the
company’s prospects in the “crowded space” of low-cost African pay-TV.
“We have four million subscribers across 13 sub-Saharan countries, and that will grow as
we roll out across 10 more countries in the coming months,” he said. StarTimes has been
remarkably successful in making the transition from system integrator to technology
provider to Africa’s second largest pay-TV platform, but for Rathbone, it is the company’s
corporate philosophy that sets it apart.
“Our approach is much more cooperative and less antagonistic than a 1970s ‘destroy the
competition model. That model works for saturated markets, but Africa is still an ‘endless
3. plain’. We want to cooperate with everyone in this space. There’s a bit of Chinese-style
socialism in our outlook. XinXing Pang, the StarTimes Group president, has a vision - and
it’s one that I share – and that is to bring good, cheap television to Africa. He wants to
make a difference in Africa.”
“To make our vision work,” continues Rathbone, “we need to engage more directly with our
partners. You have to make friends in Africa - that’s how it works. Africa has to see us as
an African enterprise. We might be a Chinese company, but our focus, our engagement,
our vision, is African.” Testament to that is the fact that 90 per cent of employees in the
African project are local staff, trained on the job and entrusted to manage the business in
each market.
Pang, an engineer by training, is committed to making a change in Africa, according to
Rathbone. Whereas DStv wants to "protect its space" in the market, and companies like
GTV and HiTV had hoped to move in on that space with high-profile sports rights
acquisitions, StarTimes is “much more careful and strategic”. The first step, he says, was
to sell set-top boxes. Then, with more than four million in the market, the next step is to
convince people to pay an extra $10 for the operator’s own content and channel packages,
without having to install a dish.
Before taking up his position as head of sport at StarTimes, Rathbone had spent several
years at SuperSport, the premium sports broadcasting subsidiary of Multichoice, the
Naspers-owned pay-TV group based in South Africa. In 2008, he was named head of
Africa for SuperSport and divided his time over the following four years between Lagos,
Nairobi and Johannesburg.
Rathbone’s appointment came a few months after SuperSport lost the bulk of the pay-TV
rights in sub-Saharan countries to England’s Premier League, easily the most popular
sports property in the region, to upstart GTV, with the Nigerian rights going to HiTV - which
also picked up the Spanish Liga and Italian Serie A rights, among other European soccer
properties, for Nigeria.
4. !
The sudden rise in competition created a boom in the pay-TV market, and as a result DStv
began paying closer attention to the sub-Saharan market. “Before that, the rest of Africa
was seen as a bonus for DStv. It didn’t really take the market seriously until then,” says
Rathbone.
Subscriptions to DStv outside South Africa doubled and even tripled in some territories
during Rathbone’s tenure, even though GTV and HiTV left SuperSport, one of the main
drivers of subscriptions to the platform, with very little in the way of exclusive premium
sports rights. Rathbone noted that when he took up the job, DStv had around 180,000
subscribers in Nigeria, and when he left four years later, it had 1 million - and for half that
time, it didn’t have English Premier League or Liga rights. In Kenya, DStv had brought in
35,000 subscribers in the 13 years to 2008, but only four years later, that number had
grown to 140,000. “A lot more marketing was done during those four years, thanks to the
competition." When HiTV and GTV went under, DStv had the market to itself.
But the lull lasted only a short while, as StarTimes went from being the “dark horse” to a
bona fide challenger to the South African giant. In 2011, StarTimes acquired the free-to-air
distribution rights to the Uefa Champions League, despite being a pay-TV operator, a
move which seemed far-fetched at the time but which marked a turning point: the company
made it known that it was willing and prepared to spend on sports rights – at the same
time as its low-cost DTT services were being rolled out across the region.
In response, DStv made two bold moves: in the summer of 2011, it launched GoTV, its
own low-cost DTT service, across sub-Saharan Africa, providing potential subscribers with
5. the attractive carrot of GO-Select 1 and 2, a watered-down version of its premium sports
offering; and two years later, it left StarTimes out in the cold by tying up exclusive cross-
platform, pan-regional rights to the Uefa Champions League and Europa League for more
than $125 million per season.
Building the Bundesliga
It took some time, but StarTimes hit back with perhaps the clearest sign yet that it meant
business: in October 2014, it secured exclusive pan-regional rights to Germany’s top-tier
soccer league, the Bundesliga, for five seasons, paying an estimated $50 million over the
course of the deal.
“We have been looking around for the spaces left by DStv - we’re not going to get into
fistfights with them to buy a big property. They took a punt at the Bundesliga, but we got it.
They essentially let it go - it was the lowest-hanging of SuperSport’s fruit; it was third or
fourth in their pecking order, after the EPL and the Liga and possibly Serie A.”
For Rathbone, sport “is still the differentiator in this market. The problem is that sport is
expensive. The low-cost pay-TV market in Africa is quite a crowded space and they’re all
offering low-cost content. But if you want people to subscribe, you need sport."
“We will be looking at a range of sport in the future,” he added. “I think that DStv will fight
aggressively to hang on to the English Premier League and the Spanish Liga. If we were
to outbid them for the EPL, we might have to spend $100 million - and that might bring us
100,000 new subscribers. That’s $100,000 per subscriber. But volleyball, say, might cost
$200,000 and might bring us 10,000 new subscribers - so that’s $20 per subscriber. You
do the math.”
“Everyone thinks it’s all about the English Premier League, but while sport is important for
pay-TV, it’s not enough,” says Rathbone. “You still need a range of content. There’s a
strong tradition in Africa of going to watch the footie in a bar. For the family at home, you
need to offer a range of entertainment, including news, kids channels and films.”
In more developed markets, rights holders like Uefa and the Premier League have split
their content into packages, to drive revenues and satisfy regulators, whereas in Africa,
those rights have tended to stay in very few hands. That could change, believes Rathbone,
if the Premier League decides to offer more than one package of rights in sub-Saharan
Africa, or if the Spanish Liga follows through on a plan to launch a Liga channel that could
offer non-exclusive live coverage of Liga matches.
But such developments may still be a cycle or two away, and sport is still a very small
percentage of StarTimes’ total content. In July last year, it acquired the rights to the
package of Uefa qualifying matches to the 2016 European Championships and the 2018
Fifa World Cup, a deal which Rathbone qualified as a “good one, which was reasonably
priced”. But the Bundesliga is its biggest property to date, and for Rathbone, it was a “big
but attainable spend and it’s a product we can grow in five years.” He added that the
Bundesliga was more interested in how it can grow the league in Africa - "SuperSport
basically said ‘we’ll pay you but you’ll still be our number three league', whereas we will
work with them to build the Bundesliga in Africa.”
He explained that there’s a considerable tradition of Bundesliga soccer in Africa. “In the
1980s, there was a popular highlights programme called ‘Soccer Made in Germany’. The
6. Bundesliga is still there in the collective memory - anyone over the age of 40 knows the
programme. (Karl-Heinz) Rummenigge is still widely known for, among other things, his
amazing goal in the title sequence of the show.”
StarTimes has already begun the task of growing the Bundesliga’s profile, witnessed by a
separate deal, sealed late in 2014, for a series of friendly matches. The platform’s sports
channel, StarTimes Sports 2, showed the 2015 Florida Cup, a four-club competition taking
place in Orlando and Jacksonville, pitting two Bundesliga clubs, Bayern Leverkeusen and
FC Köln against Brazilian clubs Fluminense and Corinthians, in mid-January, and it also
showed the Turkish Airlines Friendship Cup, a pair of friendly matches between Vfl
Wolfsburg and South African Premier League sides Ajax Cape Town and Chippa United.
Prior to those matches, StarTimes had also aired live coverage of a South Africa friendly
match against Zambia in early January, offering parallel coverage to SABC’s own pictures
in South Africa and exclusive coverage elsewhere. “Carrying these matches made a
statement that we are here”, said Rathbone. “The message to our current and potential
subscribers is that we will deliver. I’m hopeful that showing all these matches will lead to
more.”
The rights to the South Africa match were acquired from Siyaya TV, another upstart
company with the potential to upset the status quo: Siyaya shook up the South African
sports landscape last summer when it sealed a ground-breaking R1 billion media rights
deal with the SA Football Association (SAFA) for all rights to men’s (Bafana Bafana) and
women’s national team matches, including friendlies, junior national teams, the ABC
Motsepe League (Div 1), the Sasol Women’s League and other events for six years,
starting from May 1st 2015, when the present deal with SABC expires.
Siyaya, which is set to launch in June with a package of between 15 and 20 channels on
DTT, internet and OTT, including a 24/7 channel called Bafana Bafana TV, for some R70
($6) per month, is paying a whopping R175 million per year for the SAFA rights, well up on
the combined R42 million per year it was earning from SABC (R17 million) and SuperSport
(R25 million).
DTH – the “sexier beast”
Crucially, the Bafana Bafana match was a marker for StarSat, the company’s new pan-
regional DTH platform launched a year earlier when the parent company took over TopTV,
a struggling South African DTH service that had failed to grow out of the shadows of DStv.
StarSat has since been exported to other countries in the region, including Nigeria and
Kenya. Rathbone said that the deal with Siyaya, and the production of the match
exclusively for StarSat showed that “we can do this, and that we are committed to African
sport”.
“Siyaya has the rights to the Bafana Bafana, and we want to be their DTH partner,” says
Rathbone, although it is unclear whether Siyaya has the SAFA’s pan-regional rights as part
of their deal. “They are another upstart like us. I want to work with people who want to
change the landscape and challenge the status quo”.
While StarTimes is by far the leading DTT pay-TV provider across the region, with some
four million subscribers to 873,000 GoTV customers, it has its work cut out for it to make a
dent in the DTH market. “We’re going head-to-head with DStv across Africa in digital
terrestrial, where we’re very strong, but we’re also trying to make our presence felt in
7. DTH,” says Rathbone. “We need to be in the DTH space; it’s the ‘sexier beast’ at the
moment. The medium term prospects for DTH are very good. In the longer term when the
digital transition in Africa is completed, it won’t matter as much.”
!
Indeed, recent figures show that DTH accounts for some 92 per cent of all pay-TV
revenues in sub-Saharan Africa, which totalled $3.54 billion in 2014, a massive increase
from only four years ago, when sector revenues were only $1.92 billion, according to
figures from Digital TV Research. Total pay-TV revenues for DTT platforms amounted to
only $200 million, although that is expected to quadruple by 2020.
The challenge for rival DStv, believes Rathbone, will be working out how to keep its pay-
TV revenues up when it is having to come down in price to meet StarTimes and other low-
cost operators. “We’re moving up to meet DStv; they see things falling away and have to
move down to meet us.” Even so, fighting for market share with rival low-cost pay-TV
operators at the bottom of the market is “madness. This is a market with massive potential.
We need to work out how we can all get a share, through cooperation and growth.”
Rathbone also points out that the way people are consuming TV is changing. “Everything
that happens elsewhere happens in Africa eventually - but what we’ve been seeing here is
an explosion of technological developments. In mobile telephony, for example, we’re
already seeing a classic leapfrogging from 2G voice-only networks straight to 4G LTE
technology in some markets. 4G will be the real game-changer in Africa.”
2015 will be a turning point for the continent: trail-blazer Tanzania will complete its digital
migration by mid-way through the year, in line with the ITU-stipulated deadline, while some
30 other countries are closing in on their own switchovers. And as spectrum used by
analogue broadcasters becomes available, 4G networks will spread like wildfire. 4G
services are already available in certain markets, with operators like Airtel in Rwanda and
8. the Seychelles, Safaricom in Kenya and Huawei in Ethiopia among the first to provide
high-speed mobile internet, allowing subscribers to stream live video – a key factor for
technology companies like StarTimes, which will be looking to distribute its own content on
other platforms in the near future.
!
In the meantime, StarTimes is in the process of moving its production operations from
Beijing to Africa, partly to comply with regulatory issues in some countries, and it is
investing some $40 million in a broadcast facility in Nairobi. At some point, it will be looking
to fill a glaring gap in its schedules: the possible launch of a StarTimes Sports 1 channel to
go with the existing StarTimes Sports 2 – a development which could come sooner rather
than later when the dust settles around the rights sales for both the Spanish Liga and the
English Premier League, due to be auctioned later this year. The company could also
move into the far more affordable arena of domestic soccer leagues, a space presently
dominated by SuperSport, which holds the rights in the present season to the top-tier
leagues in Kenya, Nigeria, Uganda, Zambia and Zimbabwe as well as the rights to the
home matches of three top Angolan clubs.
Other sports hold appeal too, and not just as television products; earlier this month,
StarTimes sealed a three-year title sponsorship deal with the Falcons, a Ugandan top-tier
National Basketball League (FUBA Airtel basketball league) team, worth Shs250 million
($86,500) in total. From April, they will be known as the StarTimes Falcons, a move that
ties in neatly with the platform’s carriage of the NBA TV channel.
Taking African sport global
Rathbone is passionate about bringing high-quality low-cost TV, especially sport coverage,
to Africans, but he’s also keen to get the word out about African sport. After leaving
Supersport in 2012, he created Sports News Africa, a daily half-hour sports news show for
distribution both within Africa and abroad. SNA is, he says, “unique and exclusive. It
provides a weekly round-up of sports news from Africa, as well as international sports
news with an African flavor, such as news about African players in the Premier League, for
example”.
9. The programme is presently carried throughout Africa on StarTimes Sports 2, as well as on
Metro TV in Ghana and DTT platform Azam in Tanzania and Uganda, with “half a dozen
conversations going on” and will begin airing in June on Siyaya TV in South Africa.
“Our goal,” says Rathbone, “is to create a one-hour weekly programme on African sports
news for international distribution with content ranging from Nigerian basketball to South
African rugby and Kenyan football”. The company also makes a daily 90-second version of
the show called SNA Express, aimed at broadcasters for use on their websites and other
digital marketing and interface platforms.
Sportcal
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