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THE MEDIA MARCH 2017_DIGITAL

media disruptor But the company is not alone in pioneering the possibilities for on-demand content. Netflix and ShowMax are making inroads in South Africa and across the continent. Naspers is reported to be seeking partnerships with mobile network operators across sub-Saharan Africa to boost ShowMax. The company has already concluded a partnership with Safaricom in Kenya and says talks are underway with other telcos. MTN Nigeria recently announced its converged OTT VOD service for subscribers, while Ericsson is actively securing content deals for its Nuvu VOD service, which it is taking to Africa in partnership with mobile operators. There are opportunities for smaller, niche players to enter the market too. Pride TV, a VOD channel for Africa’s lesbian, gay, bisexual and transgender community, recently announced its launch. VOD is set to create new bedfellows as content specialists, software firms, telcos, media companies and big brands partner to tap into the potential. Even the hospitality sector is seeing the potential for VOD services. In the world of sport, Rider Research reports that 2016 was the year live sports went over the top, with mainstream live sports coverage moving from TV to the internet. Rider cited a Consumer Technology Association study as saying a third of sports fans now want to watch sports programming on their cellphones and tablets. In South Africa another brand- VOD service partnership saw Discover Digital breaking traditional moulds for sports event coverage, with a simultaneous live stream of the SuperGP Championship to the SuperGP website and the organisation’s Facebook page, presenting new options for web page branding, advertising sales and monetising of archived content. Behind the scenes While the world of VOD presents heady new business opportunities, on-demand digital is not a goldmine in Africa – yet. Start-up costs in this space could be prohibitive for would-be on-demand service providers, and newcomers must seek mutually beneficial partners and new business approaches to make the business viable. Content licensing and screening rights issues can hamper content offerings, while issues such as technical quality, payment gateways and recommendation engines must also be addressed. And these investments must be made ahead of mass adoption when economies of scale are achieved. VOD is definitely having an impact on audiences but unfortunately this remains limited to the high LSM, high spend end of the market and therefore is still relatively small. It means the ability to generate revenue in the short term through subscriptions is extremely limited and therefore high-cost VOD businesses are running, and will continue to run, at a loss for several years. Because of the enormous expense of content rights, marketing and technical development, and the slow uptake of services, VOD is most certainly a long term business strategy and so one needs to be able to remain sustainable for a lengthy period before beginning to turn a profit. The casualties in this industry to date – The Node and Vidi (Altec and Times Media respectively) have also shown that big listed companies don’t necessarily have the stomach or dedicated financial resources to stay in the game and so success in the VOD space heavily relies on being nimble, cost efficient, remaining dedicated to your cause and really to think out the box in terms of long term sustainable business strategies. Those that do will strive and thrive. The emphasis is on long term: South Africans tend to resist new technologies 30 | themedia www.wagthedog.co.za


THE MEDIA MARCH 2017_DIGITAL
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