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Straight Talk Consumer and Entertainment Services

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It took less than 30 months for pan-African pay-DTH service Kwesé to realize it was not going to make the cut. Earlier this month, the pay-TV wing of Econet Media's subsidiary, which operated in 12 markets, was placed into administration with a reported $130m in liabilities payable to its content suppliers. Prior to this news being announced, Ovum released its latest forecasts for pay TV and FTA in the Middle East & Africa. We omitted Kwesé, foreshadowing the pay-TV outfit's impending fate.

 

Figure 1: Market share of cable, DTH, and DTT pay-TV operators in Africa, 2019 forecastMarket share of cable DTH and DTT payTV operators in Africa 2019 forecast

Source: Ovum, Middle East & Africa: Pay-TV & FTA Forecasts to 2024 (June 2019)

 

The writing was on the wall long before this. In November 2018, Kwesé undertook a strategy reorientation, pulling the plug on most third-party channels, some sports channels, and a number of general entertainment channels. In December 2018, Kwesé's partnership with Asian freemium OTT provider iflix was terminated when the latter pulled out of its joint venture with Econet, Kwesé's parent company.

So, what are the factors at play here? For the best part of two decades, DStv has had exclusive rights to the most popular sporting events in the world, and it invests in original content. Kwesé tried its luck with second-tier sports events, as well as with the NBA and NFL, but this was clearly insufficient. Other African operators in the past have tried to adopt a similar strategy, such as HiTV and TStv, but they have also failed.

Also, African viewers are increasingly turning to mobile as their primary viewing platform. This means content is typically received over data rather than through traditional broadcast. In a survey conducted by Ovum, 57% of African respondents said they used their phone daily to access TV shows, with 75% stating they used their phone to access short-form videos.

The shifting sands of TV viewing habits, in both mature and developing markets, translate into the following:

  • For premium content, viewers in developing markets are still loyal to established brands for long-term subscriptions. It is difficult for new DTH and cable operators to compete directly with these brands without making huge investments and without taking numerous key content rights from them.
  • Pay-TV operator consolidation is underway in various TV markets to survive against the threat of online. FTA broadcaster partnerships are emerging, in which broadcasters pool together their strengths to keep eyeballs from the online giants. Consumers want more flexibility.
  • The price of mobile data is dropping rapidly in most markets, and zero-data tariffs for partner content is rising in markets where smartphones are a key medium for content consumption. Furthermore, the arrival of 5G means the advantage traditional broadcast had over online will almost completely erode, particularly in emerging markets.

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