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Mobile TV
African TV goes OTT
As OTT or internet TV become more popular, content providers may be worrying about whether and how they can make money from it. Phil Desmond talks to Digital TV Research principal analyst Simon Murray about global content consumption trends and the future of the African OTT market.
INTERNET TV, OVER-THE-TOP (OTT) TV, mobile TV – whatever you call it, it is having a transformative effect on both transmission and viewing habits everywhere – and Africa is no exception. But do new forms of content consumption offer a workable business model for content providers?
Simon Murray, principal analyst with Digital TV Research, which provides business intelligence for the television industry, notes that the growth of content viewing that doesn’t necessarily involve the traditional TV is continuing. As he says, “Globally OTT is booming – albeit, in many countries, from a very low base.” He adds, “The US leads the charge with a multitude of options; although several US-based companies have launched, or plan to launch, globally, no other country will have as much choice as the US.”
However, as a model for the future direction of other markets, the US could be instructive. Murray explains, “Cord-cutting [the practice of cancelling or forgoing a pay television subscription or landline phone connection in favour of an alternative internet-based or wireless service] has had a devastating impact on the traditional pay TV market – cable, IPTV and satellite – in the US, partly because of the wide OTT choice but also because traditional pay TV is so expensive.” He adds, “The US is expected to continue to lose traditional pay TV subscribers.”
That said, he believes that traditional pay TV will not die completely. It will survive, he suggests, partly due to distribution partnerships with the OTT players.
So is this a trend? “This level of cord-cutting is not likely to be repeated anywhere else. Traditional pay TV is not as expensive elsewhere and there will not be the distraction of OTT choice seen in the US.”
But that is not necessarily good news. “Traditional pay TV will not grow in the developed world,” says Murray. “In fact revenues will fall in most of these countries as subscribers convert to triple-play bundles [for example, broadband, landline and TV] – thus spending more overall with an operator, but less on TV.”
He adds that there will also be pay TV subscriber growth in many emerging markets that are yet to reach pay TV maturity and where economies are growing.
“For consumers,” he adds, “the broadband connection is more important than the TV choice.” And he doesn’t necessarily mean fixed broadband. “Mobile broadband penetration is a lot higher than fixed broadband in many countries, especially emerging ones,” says Murray. And, while it is not an immediate prospect in much of Africa, the rollout of 5G will change things a lot – and could even make fixed broadband irrelevant.
So what is the future for the big players in this new marketplace? Will competition and costs rein in some more ambitious players like Netflix and Amazon?
Murray believes that OTT – and especially SVOD [subscription video on demand] – will boom for some time, especially given the global rollout plans from big names like Disney+, Paramount+/ViacomCBS, Peacock/NBC Universal and WarnerMedia/HBO. “However,” he adds, “not all of these players will survive, with mergers likely.”
Relevant to Africa is the fact that, as he says, local players cannot compete with the content budgets of these global players – except where sport is concerned. He suggests that such local players are expected to form alliances on a country-by-country basis with the global players.
Local players cannot compete on content budgets – except where sport is concerned.
