The past week has seen a startling contrast in fortunes of two entertainment giants as technology transforms both TV viewing and the business of broadcasting.
African pay-TV giant MultiChoice announced that two sections of the business would be realigned in response to the changing behaviour of its customers, who “are increasingly moving away from traditional voice calls and visits to walk-in centres and adopting new self-service and digital technologies to engage with the company”.
The announcement came hard in the wake of the MultiChoice Group announcing R50-billion revenue and strong subscriber growth in its maiden results as a JSE-listed company. However, the stellar results for its year to March 2019 masked the slow erosion of its Premium subscriber base by global video-on-demand giants Netflix.
The US-headquartered service this week began producing its second original South African series, Blood & Water, in the Johannesburg area. It follows the Netflix acquisition of the South African-made original series Shadow, and the start of shooting of the first Netflix-commissioned local original, Queen Sono.
Both original series will only air in 2020, but Netflix has meanwhile established a firm foothold in South Africa, with estimates of its local subscriber base ranging from 250,000 to 500,000. A high proportion of these have been at the expense of subscribers to the Premium package on MultiChoice’s DStv platform.
For most viewers making the switch, it is a matter of economics: DStv Premium costs R809 per month, along with a R90 “access fee” if subscribers use a personal video recorder (PVR) decoder. The Netflix Premium service, which can be shared across four screens simultaneously, and includes high-definition (HD) and ultra-HD options, costs R169 per month.
DStv’s extensive offering of live sports, which is conspicuous by its absence on Netflix, is its saving grace. For fans of live rugby, cricket and English Premier League football, there is little alternative. DStv this month also started experimenting with live sports on its video-on-demand service, Showmax. Subscribers to DStv Premium and lower-cost Compact services can also access DStv Now, an app for streaming live programming via smartphones and tablets.
However, a 30-day free trial offered by Netflix provides ample opportunity to discover the global binge-watching obsession that is synonymous with the platform. Netflix releases complete seasons of its series simultaneously, breaking the traditional mould of “linear viewing” that defines old-style TV broadcasting.
Netflix CEO and co-founder Reed Hastings told Business Times earlier this year that his company had no intention of replacing MultiChoice.
“Their subscriber growth is steady in South Africa,” he said. “They serve a need that’s independent of the Internet, via low-price satellite. There is no intention of capturing that audience. If they’re growing, it’s because they serve a need.”
However, MultiChoice CEO Calvo Mawela this week made it clear that Netflix was in its cross-hairs.
“We believe we are maintaining our competitive position in an early-stage OTT market,” he told Business Times, referring to the definition of streaming services as being delivered “Over The Top” of Internet connectivity services. “DStv Now and Showmax users have doubled in FY19 and our connected video user base is currently estimated at 1.6 times that of Netflix.”
Mawela does agree with Hastings, however, that the services meet different needs: “About 50-60% of the Netflix base are also DStv subscribers – suggesting the service is largely complementary to pay-TV.”
However, he is under no illusion that MultiChoice can be complacent: “Changes in consumer viewing patterns and technology have resulted in a significant increase in content that is available for video consumption. As such, continued innovation is a critical success factor for any company exposed to changes in technology and consumer demand. DStv Now and Showmax are (a) response to changing consumption patterns as a result of video entertainment services increasingly moving online.
“The growth of both of these services is evident of the changing consumer behavior around the consumption of video entertainment, in particular the move away from linear viewing.”
MultiChoice is also investing heavily in original local content, says Mawela.
“As a group, we will continue increasing our spend on local content as a percentage of total general entertainment spend in line with our target of 45% by 2022 across all our services. Our pipeline for next year includes 52 new local film productions and 29 new local dramas, including the much anticipated and renowned Shaka Ilembe.”
This vast reservoir of local content remains a major differentiator from “imported” services, but the growing roster of Netflix Originals gives it unmatchable international appeal. By generating local content globally, it increases its traction both among local audiences and those from other countries with global appetites.
“We’re investing in a wide range of original series and movies from all over the world to provide a rich, personalised and constantly changing trove of entertainment choices for a broad global membership base,” a company spokesperson told Business Times this week. “There is an appetite for local, quality content that has the ability to resonate with consumers both locally and globally. This is just the beginning of our investment in Africa.
“Netflix is already available in 190 countries, including all African countries. We are actively seeking local African content that will transcend borders. We are committed to giving passionate local content creators a worldwide platform to share their vision, and offering consumers around the world unique and diverse stories they can discover and enjoy.”
The strategy is gaining an unexpected audience, according to Lauren Winchester, MD of the Epiphany brand agency, which recently moved its offices from the northern suburbs of Johannesburg to Vilakazi Street in Soweto.
“The emerging popularity and profile of Netflix in townships like Soweto is groundbreaking,” she says. “The format is consistent with tech-savvy young people who want to watch what they want when they want to watch it. The rise of fibre in township areas is another enabler. I see more Netflix advertising in the townships compared to the northern suburbs, indicative of a progressive, visionary marketing strategy.”
Millennials turning 40: NOW will you stop targeting them?
It’s one of the most overused terms in youth marketing, and probably the most inaccurate, writes ARTHUR GOLDSTUCK
One of the most irritating buzzwords embraced by marketers in recent years is the term “millennial”. Most are clueless about its true meaning, and use it as a supposedly cool synonym for “young adults”. The flaw in this targeting – and the word “flaw” here is like calling the Grand Canyon a trench – is that it utterly ignores the meaning of the term. “Millennials” are formally defined as anyone born from 1980 to 2000, meaning they have typically come of age after the dawn of the millennium, or during the 21st century.
Think about that for a moment. Next year, the millennial will be formally defined as anyone aged from 20 to 40. So here you have an entire advertising, marketing and public relations industry hanging onto a cool definition, while in effect arguing that 40-year-olds are youths who want the same thing as newly-minted university graduates or job entrants.
When the communications industry discovers just how embarrassing its glib use of the term really is, it will no doubt pivot – millennial-speak for “changing your business model when it proves to be a disaster, but you still appear to be cool” – to the next big thing in generational theory.
That next big thing is currently Generation Z, or people born after the turn of the century. It’s very convenient to lump them all together and claim they have a different set of values and expectations to those who went before. Allegedly, they are engaged in a quest for experience, compared to millennials – the 19-year-olds and 39-olds alike – supposedly all on a quest for relevance.
In reality, all are part of Generation #, latching onto the latest hashtag trend that sweeps social media, desperate to go viral if they are producers of social content, desperate to have caught onto the trend before their peers.
The irony is that marketers’ quest for cutting edge target markets is, in reality, a hangover from the days when there was no such thing as generational theory, and marketing was all about clearly defined target markets. In the era of big data and mass personalization, that idea seems rather quaint.
Indeed, according to Grant Lapping, managing director of DataCore Media, it no longer matters who brands think their target market is.
“The reason for this is simple: with the technology and data digital marketers have access to today, we no longer need to limit our potential target audience to a set of personas or segments derived through customer research. While this type of customer segmentation was – and remains – important for engagements across traditional above-the-line engagements in mass media, digital marketing gives us the tools we need to target customers on a far more granular and personalised level.
“Where customer research gives us an indication of who the audience is, data can tell us exactly what they want and how they may behave.”
Netflix, he points out, is an example of a company that is changing its industry by avoiding audience segmentation, once the holy grail of entertainment.
In other words, it understands that 20-year-olds and 40-year-olds are very different – but so is everyone in between.
* Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter and Instagram on @art2gee
Robots coming to IFA
Robotics is no longer about mechanical humanoids, but rather becoming an interface between man and machine. That is a key message being delivered at next month’s IFA consumer electronics expo in Berlin. An entire hall will be devoted to IFA Next, which will not only offer a look into the future, but also show what form it will take.
The concepts are as varied as the exhibitors themselves. However, there are similarities in the various products, some more human than others, in the fascinating ways in which they establish a link between fun, learning and programming. In many cases, they are aimed at children and young people.
The following will be among the exhibitors making Hall 26 a must-visit:
Leju Robotics (Stand 115) from China is featuring what we all imagine a robot to be. The bipedal Aelos 1s can walk, dance and play football. And in carrying out all these actions it responds to spoken commands. But it also challenges young researchers to apply their creativity in programming it and teaching it new actions. And conversely, it also imparts scholastic knowledge.
Cubroid (Stand 231, KIRIA) from Korea starts off by promoting an independent approach to the way it deals with tasks. Multi-functional cubes, glowing as they play music, or equipped with a tiny rotating motor, join together like Lego pieces. Configuration and programming are thus combined, providing a basic idea of what constitutes artificial intelligence.
Spain is represented by Ebotics (Stand 218). This company is presenting an entire portfolio of building components, including the “Mint” educational program. The modular system explains about modern construction, programming and the entire field of robotics.
Elematec Corporation (Stand 208) from Japan is presenting the two-armed SCARA, which is not intended to deal with any tasks, but in particular to assist people with their work.
Everybot (Stand 231, KIRIA) from Japan approaches the concept of robotics by introducing an autonomous floor-cleaning machine, similar to a robot vacuum cleaner.
And Segway (Stand 222) is using a number of products to explain the modern approach to battery-powered locomotion.
IFA will take place at the Berlin Exhibition Grounds (ExpoCenter City) from 6 to 11 September 2019. For more information, visit www.ifa-berlin.com