tv & vod for africa deep dive session -...
TRANSCRIPT
TV & VOD for AFRICA
Deep Dive SessionIn partnership with Ericsson
and Balancing Act
TABLE OF CONTENT
• Introduction & Overview
• Power Shifts
• Developed vs Developing Paradigm
• Visual Business Models
• Pay TV
• Netflix
• Amazon
• Youtube
• IPTV/Triple Play
• iTunes
2
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INTRODUCTION3
There is a rapid change in the TV market in Sub-Saharan Africa. Thechange-over to DTT is happening at the same time as VOD offeringsare blossoming in the market. Content, still under developed across thecontinent, is struggling with piracy. Those that expect this market toresemble Europe’s transition from Analog to Digital TV are in for asurprise as the European (and American) transitions did not happen inthe age of Netflix. The Sub-Saharan Africa experience will see highlyfunded international internet offerings competing with localbroadcasters, pushing regulatory boundaries and changing consumertastes. The demand for VOD is clear, how the market will shake out, isnot.
This handbook utilizes visual business modeling to explain the differentapproaches players have taken in the market to approach VOD. Byvisualizing the business model, ecosystem and how the players inter-relate, a different perspective can be achieved.
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Analogue FTADTT Providers
DTH ProvidersIPTV Providers
OTT Players (incl. Youtube)
Power shift direction& magnitude
Shift from/to (weight is velocity)
KEY
Digital migration
4 POWER SHIFTS
Current market power
Future market power
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DEVELOPED VS. DEVELOPING PARADIGMS5
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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
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DEVELOPED VS. DEVELOPING PARADIGMS
BUSINESS MODELS: PAY TV7
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BUSINESS MODELS: NETFLIX8
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BUSINESS MODELS: AMAZON9
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BUSINESS MODELS: YOUTUBE10
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BUSINESS MODELS: IPTV/TRIPLE PLAY11
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BUSINESS MODELS: iTUNES12
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VALUE PROPOSITION ELEMENTS13
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.
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VALUE PROPOSITION ELEMENTS14C
UST
OM
ERS
Entire Country
SEGMENTS
PR
ICIN
G
STRATEGY
PRICE MODEL
REGIONS Major Cities Selected Major Cities
BusinessesExpatsAchieversCoreYouthFamilies
Market-grab(Subsidised pricing)
Break-even or Cost-plus pricing
Niche value pricing
FEA
TUR
ES
CO
NTE
NT
FEATURES
Local
Intl.
News & Local Int
UG
C
Movies & Shorts
Sport MusicSeriesDocu-
mentary
NewsMovies
& ShortsSport MusicSeries
Docu-mentary
Time-based bundles
Triple play bundles
Device bundles
Per transaction
DelayedMulti-device
Live event streaming
ChannelsVODMobile
Content-based bundles
FTA Paid-to-Air SubscriptionData excl.
priceAd-funded
Recom-mendation
Premium pricing
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VALUE PROPOSITION ELEMENTS15C
UST
OM
ERS
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
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VALUE PROPOSITION ELEMENTS16FE
ATU
RES
CO
NTE
NT
FEATURES
Local
Intl.
News & Local Int
UG
C
Movies & Shorts
Sport MusicSeriesDocu-
mentary
NewsMovies
& ShortsSport MusicSeries
Docu-mentary
DelayedMulti-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, throughoutuser’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
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VALUE PROPOSITION ELEMENTS17P
RIC
ING
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 SubscriptionData excl.
priceAd-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 asDTH 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 prepaidmobile) – 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 ofviewers 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
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VALUE PROPOSITION ELEMENTS18
We are a strategic innovation consultancy firm based in Cape Town, South Africafocusing 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 designprocesses and other methodologies.
We help our clients go from idea, to execution and profit.
&INNOVATION CONSULTING
www.andinnovation.com
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END / THANK YOU
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