NETFLIX vs Pay-Television: Who Will come out tops?

January 21, 2016 in Business, Columnists, Communications, Companies, Editorial, Opinion, Technology & Telecoms by Editor

Since the recent public launch of Netflix across Africa, a huge debate has raged on the internet and in the mainstream media as to the likely impact the online video streaming giant will have on the continent’s burgeoning pay television industry.
On one side are those who believe Netflix is the proverbial “messiah” who will finally liberate Africa’s television and movie lovers from the “evil” Pay television companies who have long been exploiting subscribers across the continent with overpriced products and outdated content.
Others argue that Netflix will suffer a still birth given Africa’s still relatively slow internet speeds, the elevated price of online access and a lack of diversified content which on Netflix is largely limited to movies and series leaving out among other things, the all-important live sport.
While the jury is still out and probably will be for a while, regarding which side is most likely to prevail, there are a number of important factors that have not been taken into account or have been lost in the clatter of arguments by both sides.
The first is the fact that industry experience in the more developed markets has taught us that for most consumers of “on demand services” (whether online or via pay tv), it’s not an either or; it’s usually both, the reason being, consumers of such products can afford and want both alternatives. That is, the ability to watch the latest movie or series on Netflix but still have the option of being able to enjoy live sporting action, increasingly on the go.
Secondly, studies indicate online on demand services are by and large consumed on an individual basis, usually on laptops and handheld devices, not in groups or as families which is the case for most pay television audiences. These are viewing patterns that are unlikely to change in the foreseeable future especially in Africa where the sense of family is still very strong and participation in group activity is important. This also suggests that the two audiences are distinct markets which will continue to grow and expand organically.
Lastly it is important to note that the services being offered by Netflix though being marketed as new for users on the continent actually offer a very similar experience to on-demand services already being sold by a number of pay television companies such as MultiChoice. These include among others “DStv Box office, DStv Now and live sports on the SuperSports app.
The real question therefore should not be whether the rise of one lead to the death or demise of the other but rather how the two will coexist and complement each other in what is a relatively new but very exciting industry for the continent.
Perhaps as a sneak preview into future, is best provided by Smart internet enabled televisions which are fast becoming a lot more affordable and thus a standard feature of the African video entertainment market. Aside from mobility, they come with all the interactive features which are typically available on handheld devices popular with individualistic online on-demand customers along with the size and grandeur which is so important for the typically group consumers of pay television services. In short they provide technological convergence and it appears that is where the market is going.