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.
Money talks and electronic gaming evolves
Computer gaming has evolved dramatically in the last two years, as it follows the money, writes ARTHUR GOLDSTUCK in the second of a two-part series.
The clue that gaming has become big business in South Africa was delivered by a non-gaming brand. When Comic Con, an American popular culture convention that has become a mecca for comics enthusiasts, was hosted in South Arica for the first time last month, it used gaming as the major drawcard. More than 45 000 people attended.
The event and its attendance was expected to be a major dampener for the annual rAge gaming expo, which took place just weeks later. Instead, rAge saw only a marginal fall in visitor numbers. No less than 34 000 people descended on the Ticketpro Dome for the chaos of cosplay, LAN gaming, virtual reality, board gaming and new video games.
It proved not only that there was room for more than one major gaming event, but also that a massive market exists for the sector in South Africa. And with a large market, one also found numerous gaming niches that either emerged afresh or will keep going over the years. One of these, LAN (for Local Area Network) gaming, which sees hordes of players camping out at the venue for three days to play each other on elaborate computer rigs, was back as strong as ever at rAge.
MWeb provided an 8Gbps line to the expo, to connect all these gamers, and recorded 120TB in downloads and 15Tb in uploads – a total that would have used up the entire country’s bandwidth a few years ago.
“LANs are supposed to be a thing of the past, yet we buck the trend each year,” says Michael James, senior project manager and owner of rAge. “It is more of a spectacle than a simple LAN, so I can understand.”
New phenomena, often associated with the flavour of the moment, also emerge every year.
“Fortnite is a good example this year of how we evolve,” says James. “It’s a crazy huge phenomenon and nobody was servicing the demand from a tournament point of view. So rAge and Xbox created a casual LAN tournament that anyone could enter and win a prize. I think the top 10 people got something each round.”
Read on to see how esports is starting to make an impact in gaming.
Blockchain is generally associated with Bitcoin and other cryptocurrencies, but these are just the tip of the iceberg, says ESET Southern Africa.
This technology was originally conceived in 1991, when Stuart Haber and W. Scott Stornetta described their first work on a chain of cryptographically secured blocks, but only gained notoriety in 2008, when it became popular with the arrival of Bitcoin. It is currently gaining demand in other commercial applications and its annual growth is expected to reach 51% by 2022 in numerous markets, such as those of financial institutions and the Internet of Things (IoT), according to MarketWatch.
What is blockchain?
A blockchain is a unique, consensual record that is distributed over multiple network nodes. In the case of cryptocurrencies, think of it as the accounting ledger where each transaction is recorded.
A blockchain transaction is complex and can be difficult to understand if you delve into the inner details of how it works, but the basic idea is simple to follow.
Each block stores:
– A number of valid records or transactions.
– Information referring to that block.
– A link to the previous block and next block through the hash of each block—a unique code that can be thought of as the block’s fingerprint.
Accordingly, each block has a specific and immovable place within the chain, since each block contains information from the hash of the previous block. The entire chain is stored in each network node that makes up the blockchain, so an exact copy of the chain is stored in all network participants.
As new records are created, they are first verified and validated by the network nodes and then added to a new block that is linked to the chain.
How is blockchain so secure?
Being a distributed technology in which each network node stores an exact copy of the chain, the availability of the information is guaranteed at all times. So if an attacker wanted to cause a denial-of-service attack, they would have to annul all network nodes since it only takes one node to be operative for the information to be available.
Besides that, since each record is consensual, and all nodes contain the same information, it is almost impossible to alter it, ensuring its integrity. If an attacker wanted to modify the information in a blockchain, they would have to modify the entire chain in at least 51% of the nodes.
In blockchain, data is distributed across all network nodes. With no central node, all participate equally, storing, and validating all information. It is a very powerful tool for transmitting and storing information in a reliable way; a decentralised model in which the information belongs to us, since we do not need a company to provide the service.
What else can blockchain be used for?
Essentially, blockchain can be used to store any type of information that must be kept intact and remain available in a secure, decentralised and cheaper way than through intermediaries. Moreover, since the information stored is encrypted, its confidentiality can be guaranteed, as only those who have the encryption key can access it.
Use of blockchain in healthcare
Health records could be consolidated and stored in blockchain, for instance. This would mean that the medical history of each patient would be safe and, at the same time, available to each doctor authorised, regardless of the health centre where the patient was treated. Even the pharmaceutical industry could use this technology to verify medicines and prevent counterfeiting.
Use of blockchain for documents
Blockchain would also be very useful for managing digital assets and documentation. Up to now, the problem with digital is that everything is easy to copy, but Blockchain allows you to record purchases, deeds, documents, or any other type of online asset without them being falsified.
Other blockchain uses
This technology could also revolutionise the Internet of Things (IoT) market where the challenge lies in the millions of devices connected to the internet that must be managed by the supplier companies. In a few years’ time, the centralised model won’t be able to support so many devices, not to mention the fact that many of these are not secure enough. With blockchain, devices can communicate through the network directly, safely, and reliably with no need for intermediaries.
Blockchain allows you to verify, validate, track, and store all types of information, from digital certificates, democratic voting systems, logistics and messaging services, to intelligent contracts and, of course, money and financial transactions.
Without doubt, blockchain has turned the immutable and decentralized layer the internet has always dreamed about into a reality. This technology takes reliance out of the equation and replaces it with mathematical fact.