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.
Building Africa’s Century
The 4th industrial revolution will be on the agenda of this week’s Gartner IT Symposium in Cape Town. Doug Woolley, GM of Dell Technologies South Africa, ponders its meaning for Africa
Is this Africa’s Century, as President Cyril Ramaphosa said at the recent WEF on Africa gathering? I believe so. The event made solid headway in charting a course forward for African-centric solutions to our challenges.
Technology featured often in discussions and the 4th Industrial Revolution was a central theme. Many of the outcomes also tied to a more connected digital world. But those are the broad strokes. What happens next?
An important avenue can be found in all the individual investments made inside societies, such as broadband. The spread of connectivity is in part due to telecommunications firms being mandated by the Government to reach rural and under-serviced communities. But the major momentum behind broadband stems from demand. From individuals to enterprises, a hungry broadband market has helped South Africa become much more connected.
This paradigm applies to other technology investments as well. All of them add up to support the ideas and advancements that were discussed at WEF on Africa. The need for better services and performance through technology stokes the Fourth Industrial Revolution’s engine. Every network, every datacentre, every smartphone is a piece of the puzzle that will create Africa’s Century.
We are further along the curve than most people realise. If I can judge a country’s potential based on how digitally mature its organisations are, then South Africa is not in bad shape. Earlier this year, the annual Dell Technologies Digital Transformation Index ranked South Africa in the top ten, ahead of most developed nations. The investments made by the Public and Private sectors are taking root.
It may not make headlines, but all these individual ambitions pointing in the same direction are building the change we all want to see.
This brings me to the Gartner IT Symposium Xpo, the business-technology event taking place at the Cape Town International Convention Centre from 16 to 18 September. If WEF on Africa challenged for solutions at a high level, then the Gartner Symposium is where those individual investments come into play.
The nitty-gritty of the 4IR era will be on the Symposium agenda. Research by World Wide Worx on the uptake of 4IR technologies among South African enterprises will be presented tomorrow (Tuesday) by one of the company’s data analysts, Bryan Turner.
I also anticipate discussions about multi-cloud. Cloud has grown tremendously as African organisations saw the progress that came with investing in it, connectivity and data – the core ingredients of the 4IR era. Now they are looking ahead to what can be done next: that multi-cloud is on the agenda shows how Africa’s technology capability is growing.
Unified workspaces will be another good conversation topic. What happens in the office doesn’t stay in the office. Our technology habits follow us home and, more often, our home habits follow us to the ofﬁce. This makes perfect sense, because 4IR is primarily about people being empowered by technology. Our workplace technology habits are microcosms of our overall use of technology.
Multi-cloud is the ‘infrastructure’ of the 4IR conversation and the workplace is where these technologies deliver some of their value. Considerable buzz is growing around unified workspaces, which make office environments more manageable and secure while reshaping them to fit the needs of modern employees.
Stop by the Dell Technologies stand and see how we’re helping create that momentum with multi-cloud, unified workspaces and through many other channels, including skills development and supporting SMMEs to grow.
How do we create Africa’s Century? Through those individual investments that collectively stoke the engines of our country and continent. It’s not just for the big players: 4IR can provide for every organisation regardless of size. Those investments are investments in the future of Africa.
PayPal pictures how the future will be won – or lost
By AAYUSH SINGHANIA, director of Commercial Operations for PayPal Cross-Border Trade Markets
There’s no doubt that technology has already re-shaped the way the world thinks about buying and selling. Who would have thought twenty years ago that people would be shopping on their phones?
Despite the huge changes to the shopping experience in recent years, it’s important to understand that we are only part-way through this journey. We are in the midst of the fourth industrial revolution, and as technologies continue to advance, and we as a society adapt our behaviours, new opportunities and risks will present themselves to merchants of all sizes.
Here is where I see the future of commerce being won and lost, as we continue on this technology journey:
Meeting ever-increasing demand for personalised experiences
We’ve already witnessed the transition of commerce from brick and mortar to the web, and then from the web to mobile. The next phase of internet-connected devices will make commerce even more contextual whereby anything you can interact with can be a platform for commerce. Imagine being able to point your phone at your best friend’s shoes, and almost instantly they are in your shopping cart, ready to be delivered to your home?
Mobile has already made shopping an “all the time” activity and has given us a taste of what it’s like to have hyper-personalised experiences. While a consumer walking into a retail store is limited by physical space, the online world offers an unlimited shelf for merchants to deliver tailored customer experiences. Looking ahead, innovations in artificial intelligence and machine learning hold great promise to further deliver on this hyper-personalisation, by being able to learn about who a consumer really is as a person and their individual preferences.
As a result of this evolution, customers have moved from being surprised and delighted by personalised experiences to expect them in every context. Many customers, for example, now get frustrated when they receive advertisements for products that they’ve already bought, or have no interest in. This shift has made it critical for merchants to avoid delivering homogenous experiences to shoppers who demand personalised interactions across all contexts. In doing so, it’s important that merchants find a balance between personalising their offerings and ensuring consumers don’t feel their privacy is being invaded. Shoppers want to feel like a brand understands them, but isn’t stalking them, particularly in the wake of several high-profile data breaches.
Closing the consumer fulfilment gap to deliver seamless experiences
With new advancements in technology comes the ability to create seamless customer experiences that narrow the gap between customer desire and fulfilment. Gone are the days where shoppers decided to purchase an item and they were happy to wait a week to receive it – for many, two-day shipping still isn’t quick enough. The invention of the internet meant people could shop from home, and recently we’ve seen this evolve further where consumers prefer to shop on-the-go via mobile.
The big question is, what’s next? We’re already seeing the growth of commerce through technologies like AI-enabled voice assistants and virtual reality, so it’s critical that merchants keep pace with innovations that enable them to close the gap between desire and purchase in a delightful way.
At the end of the day, businesses need to remember that the act of filling up a cart and the process of checking out is not the fun part of making a purchase – these are points of friction – and technology is the answer to removing these frustrations for customers.
Managing customer reactions to technology disruption
Every tech disruption in its early days delivers excitement, fear, anxiety and doubt – not necessarily in that order. We all go through a phase of tech humanisation, because technology grows as we do – and we help shape the development of new solutions.
Technology has been used for good and bad, and technology that causes eye-raising experiences at the start will generally normalise in time. Remember the first video cameras on phones? As people learned how to use the technology, content got posted that shouldn’t have. Everything from the telephone, to radio and the television all caused concern and were initially criticised when first introduced to the public, but with time they’ve become part of our everyday lives. As technology evolves, companies learn from it, and the acceptance and humanisation of technology will take place for both consumers and merchants as new innovations are applied to the world of commerce.
Merchants need to have a mindset that’s focused on being a customer champion, while recognising that customers need to adapt to new technologies in their own time. To do this, businesses must leverage technology to build the right features that aren’t intrusive, but geared towards helping people, and respect the customer’s choice to turn technology on or off.
Technology innovation will continue to re-shape commerce in the years ahead, with the potential to deliver new growth opportunities for merchants, and offering customers more choice, convenience, value and instant gratification. In a broader sense, these innovations can also help promote employment by breaking down traditional barriers to buying and selling. For merchants, the opportunities will arise, they just have to know how to take advantage of them in the right way.