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Wait for Netflix’s big picture in SA

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Netflix finally announced its arrival in South Africa last week, but it looked like a false start. However, writes ARTHUR GOLDSTUCK, there is a bigger picture.

The global leader in online video-on-demand movies and TV finally arrived in South Africa last week, but something looked lost in translation. Numerous titles and shows that make the American offering so attractive were missing. Pricing was in dollars. This country wasn’t even mentioned in the official announcement made at the CES 2016 tech expo in Las Vegas.

However, this is the reality of being one of 130 new Netflix territories announced at the same time. Far more lucrative markets, including Russia, India and South Korea, were part of the same switch-on. Why on earth would it give South Africa priority in its marketing presence?

The fact is that Netflix has merely switched on local availability, rather than physically launched locally. With even its pricing for South Africa based on the US structure, while offering nothing like the US range, existing video-on-demand services like Showmax, MTN’s VU and OnTapTV are not yet quaking in their boots. They probably still have a few months to assess Netflix’s local offering and ensure they are sufficiently differentiated.

Already, locally relevant content and pricing that takes into account local circumstances act as major differentiators. As a result, Netflix faces massive challenges in entering South Africa. That doesn’t mean its entry was premature, though.

Firstly, the market has exploded with competitors and options, meaning that many of the most likely users would already be grabbed by the end of 2016. Showmax has made tremendous strides in bolstering its offering, OnTapTV is moving in aggressively, MTN has relaunched its FrontRow service as VU and Times Media’s VIDI remains an option – although reports of its demise are rife.

Secondly, fibre to the home is accelerating much more rapidly than anticipated, making this a more viable market more quickly than had been expected.

Thirdly, the longer Netflix waits, the more time the competitors have to flesh out their offering to make it comparable to or better than that of Netflix. Similar dynamics may well be at work in some of the other new territories.

Clearly, the marketing power and global reputation of Netflix will be a major advantage, but the fact that it has arrived almost by stealth does not bode well for cleaning up the market. Showmax has a heavy marketing presence here and, along with the other local players, has a strong emphasis on acquiring and generating locally relevant content. That means it will own many niches before Netflix even realises these exist.

DStv is unlikely to be threatened in the short term, but it’s clear entertainment godfather Naspers started Showmax as an insurance policy against Netflix and other video-on-demand players. The thinking is that, should people migrate from DStv to video on demand, try to keep them within the same stable.

However, the real strength of DStv lies in its live sports coverage, and that’s an area where no video on demand service can compete at this stage. People who subscribe to DStv only for movies and series can be expected to migrate rapidly to VoD, because it will simply make more sense both economically and in terms of choice of content and viewing time.

Those live sports rights, in particular English premier League football, are the jewels in DStv’s crown. In Nigeria, for example, that alone has killed off the competition. Locally, a high proportion of DStv subscribers are locked in because of sports, and DStv won’t allow slicing-and-dicing of its bouquet to offer sports exclusively at a lower cost: that would be the equivalent of rearranging the proverbial deckchairs on a Titanic.

For those who are not interested in sports, Naspers created the most viable competitor to Netflix, namely Showmax. It has far more content than Netflix presently makes available in South Africa, thanks to snapping up exclusive rights to first broadcasts of a wide range of popular series, and has a strong local content catalogue that is non-existent on Netflix for now. This all translates into Naspers cannibalising itself before Netflix can.

That said, we have not yet seen massive take-up of existing services.

The main reason is that the connectivity environment has not been very conducive to streaming video, and almost every single service misread the market in terms of pricing. MTN even relaunched its service under a new name with new pricing so as not to be seen to be cutting prices. The rest have all dropped their prices. It is very possible that, when Netflix launches more formally in South Africa, it will provide a Rand-based price that is more in line with the R89-R99 monthly subscription from other providers.

For the South African market, streaming video-on-demand is still a long way from being a mass-market offering. Its requirements in appropriate devices, reasonable bandwidth and monthly subscription fee means that it is still geared towards the upper end of the market.

However, we should never underestimate the public’s appetite for entertainment. Considering that DStv has more than 5-million households subscribed, the potential for streaming video is massive. The reason so many services have launched in this country while the environment  is not yet conducive to streaming video is that they don’t want to be playing catch-up when they market is more ready. The early players will get the low-hanging fruit of ready and available customers who are installing fibre-to-the-home, and anyone delaying entry runs the risk of losing out on that lucrative market.

Ironically, the Netflix announcement is likely to do more in South Africa for Showmax than for Netflix itself.  It has already boosted Showmax as it draws attention to the sector, and demands comparisons between the two, with the local service inevitably looking like the better option.

Ultimately, however, it should be borne in mind that Netflix has merely activated a South African page, meaning its open to business from South Africans, but it has not yet formally launched a physical presence in South Africa. This is why it can be argued that it was a “soft launch”, and more of an “Oh hi, South Africa” greeting than an invasion of the country.

With the rest of the world coming on board at the same time, we couldn’t expect too much local love on day one. But Netflix has one very powerful arrow in its quiver: grand plans to unify its licensing structures across the globe.

On the day of launch the official Netflix Twitter account put out this deeply significant statement of intent: “Still prisoners of territorial licensing — moving quickly to have global availability of all content on Netflix.”

When that day comes, the skirmishes for local market share will become a full blown war. Expect a few more competitors to be gone with the wind a couple of years from now.

* Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter and Instagram on @art2gee

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Get your passwords in shape

New Year’s resolutions should extend to getting password protection sorted out, writes Carey van Vlaanderen, CEO at ESET Southern Africa.

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Many of us have entered the new year with a boat load of New Year’s resolutions.  Doing more exercise, fixing unhealthy eating habits and saving more money are all highly respectable goals, but could it be that they don’t go far enough in an era with countless apps and sites that scream for letting them help you reach your personal goals.

Now, you may want to add a few weightier and yet effortless habits on top of those well-worn choices. Here are a handful of tips for ‘exercises’ that will go good for your cyber-fitness.

I won’t pass up on stubborn passwords

Passwords have a bad rap, and deservedly so: they suffer from weaknesses, both in terms of security and convenience, that make them a less-than-ideal method of authentication.  However, much of what the internet offers is independent on your singing up for this or that online service, and the available form of authentication almost universally happens to the username/password combination.

As the keys that open online accounts (not to speak of many devices), passwords are often rightly thought of as the first – alas, often only – line of defence that protects your virtual and real assets from intruders. However, passwords don’t offer much in the way of protection unless, in the first place, they’re strong and unique to each device and account.

But what constitutes a strong password?  A passphrase! Done right, typical passphrases are generally both more secure and more user-friendly than typical passwords. The longer the passphrase and the more words it packs the better, with seven words providing for a solid start. With each extra character (not to mention words), the number of possible combinations rises exponentially, which makes simple brute-force password-cracking attacks far less likely to succeed, if not well-nigh impossible (assuming, of course, that the service in question does not impose limitations on password input length – something that is, sadly, far too common).

Click here to read about making secure passwords by not using dictionary words, using two-factor authentication, and how biometrics are coming to web browsers.

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Code Week prepares 2.3m young Africans for future

By SUNIL GENESS, Director Government Relations & CSR, Global Digital Government, at SAP Africa.

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On January 6th, 2019, news broke of South African President Cyril Ramaphosa’s plans to announce a new approach to education in his second State of the Nation address, including:

  • A universal roll-out of tablets for all pupils in the country’s 23 700 primary and secondary schools
  • Computer coding and robotics classes for the foundation-phase pupils from grade 1-3 and the
  • Digitisation of the entire curriculum, , including textbooks, workbooks and all teacher support material.

With this, the President has shown South Africa’s response to a global challenge: equipping our youth with the skills they’ll need to survive and thrive in the 21st century digital economy.

Africa’s working-age population will increase to 600 million in 2030 from a base of 370 million in 2010.

In South Africa, unemployment stands at 26.7 percent, but is much more pronounced among youths: 52.2 percent of the country’s 15-24-year-olds are looking for work.

As an organisation deeply invested in South Africa and its future, SAP has developed and implemented a range of initiatives aimed at fostering digital skills development among the country’s youth, including:

AFRICA CODE WEEK

Since its launch in 2015, Africa Code Week has introduced more than 4 million African youth to basic coding.

In 2018, more than 2.3 million youth across 37 countries took part in Africa Code Week.

The digital skills development initiative’s focus on building local capacity for sustainable learning resulted in close to 23 000 teachers being trained in the run-up to the October 2018 events.

Vital to the success of Africa Code Week is the close support it receives from a broad spectrum of public and private sector institutions, including UNESCO YouthMobile, Google, the German Federal Ministry for Economic Cooperation and Development (BMZ), the Cape Town Science Centre, the Camden Education Trust, 28 African governments, over 130 implementing partners and 120 ambassadors across the continent.

SAP’s efforts to drive digital skills development on the African continent forms part of a broader organisational commitment to the UN Sustainable Development Goals, specifically Goal 4 (“Ensure quality and inclusive education for all”)

A core component of Africa Code Week is to encourage female participation in STEM-related skills development activities: in 2018, more than 46% of all Africa Code Week participants were female.

According to Africa Code Week Global Coordinator Sunil Geness, female representation in STEM-related fields among African businesses currently stands at 30%, “requiring powerful public-private partnerships to start turning the tide and creating more equitable opportunities for African youth to contribute to the continent’s economic development and success”.

Click here to read more about the Skills for Africa graduate training programme, and about the LEGO League.

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