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  • #Nollywood Entertainment #Nigeria News: It’s Not Game Over for Netflix

    Netflix’s global announcement was only a surprise in the scale of its ambition. In terms of Africa, its entry into South Africa was pre-announced already but its desire to cover the whole continent was more of a surprise. Russell Southwood looks at why Netflix’s move is good news and why things won’t necessarily all go its way.

    Whenever African VoD providers get together, one thread of the conversation has always been: what happens when someone like Netflix turns up? There are currently over 100 VoD platforms in Africa, both local, regional and international. The pessimists always give the answer that it’s hard to go wrong with: the number of players will consolidate and the smaller local players will be pushed out of the market. So might they be wrong?

    The arrival of Netflix will help the process of professionalizing the film and TV business in Africa and will be good for a number of reasons that will emerge below. But there are three reasons why it’s not simply, game over:

    1. Content Rights Acquisition: The majority of Sub-Saharan African content comes from four countries (in descending order): Nigeria, South Africa, Ghana and Kenya. There are other countries that produce a lot of content like Ethiopia and Tanzania but language (respectively Amharic and Swahili) means that neither travel well.

    Swahili content can reach a few countries but is essentially sub-regional. Francophone Africa produces TV programmes and films and travels well to the diaspora but not always between countries. I could go on but the point is that Africa’s content markets are very fragmented. The big content players like Nollywood and South Africa have created regional markets for their content but others have not been so successful.

    Elsewhere, Netflix majors with its international content (largely but not exclusively American) that has a global profile and is very compelling. Here in the UK, I get two lines on my screen outside of that: UK movies and International movies. Neither of these categories offers everything I want but is in sufficient depth to keep me interested if that’s what I want.

    Netflix will seek to deal with top-end producers who can get their films and TV programmes sufficient regional profile to make them interesting across several markets. The deal with Mo Abudu on Fifty (see below) is a good example. They don’t want to deal with producers who might have an inflated view of their content’s worth and an imperfect understanding of the word exclusivity. This business attitude might begin to change things for the better.

    Jason Njoku, iROKO TV who has energetically promoted his company as the “Netflix of Africa” now has to confront the reality of having them as a pushy neighbor rather than a distant reference point. But the point he makes in his blog is not wholly wide of the mark:”So Netflix being in Nigeria has zero impact on iROKO and our vision for the future. If it’s Nollywood fanatics, you know those guys can watch 3-5 hours per day, so iRoko is still the only place they can find most of what they are looking.”

    It’s a depth versus select choice argument and there will be room for a number of niche providers and in-depth offerings.

    2. Competition: There will be a series of large players in Sub-Saharan Africa. Current global experience suggests that as many as 3-5 may emerge. DStv’s Showmax, a mobile operator like MTN, iROKO TV and Netflix? The honest answer is that no-one really knows and there are several other players who could find themselves in one of those key slots.

    Current focus has been on whether someone like iROKO TV or Showmax will be knocked for six. Less attention has been paid to the impact on Pay TV operators. The latter offer content in linear forms at the time of their choosing. The streaming platforms offer content when you want it and how you want it.

    I’m not arguing that Pay TV will disappear tomorrow but that habits change. I watch almost no terrestrial television at the point it’s broadcast (along with about a quarter of the UK audience), subscribe to two VoD services (along with a third of the UK audience) and do not have a Pay TV channel. I was very struck by a recent conversation with a Zambian who had bought himself a Fibre-To-The-Home connection from Liquid Telecom. He gave up his DStv pay subscription and is happily streaming the content he wants to watch.

    Netflix has done a series of deals with fixed and mobile operators (for example, Vodafone in the UK and Telecom Italia). You’d like to think that mobile operators would be falling over themselves to offer Netflix. Because the high-end market who can afford sufficient bandwidth at home to make on demand viewing a reality are really relatively small in number outside of a dozen African countries.

    But the mobile operators need to be able to convince themselves that they will get sufficient revenues from a deal of this kind and that they can deliver the bandwidth required.

    3. Network: To find a market, Netflix and other VoD providers in Africa need networks that have sufficient capacity and reliability at the right price. The omens of that being true were not on display in 2015. A leading East African mobile operator launched a streaming service on 3G and 4G and had to pull the service after a fortnight. Customers were telling it something it should already have known: nothing works reliably on 3G.

    It is unlikely to be the mobile operators (with the occasional exception) who will deliver fixed broadband at a reasonable price any time soon. But Liquid Telecom has an ambitious roll-out programme for its Fibre-To-The-Home and more independent 4G operators (like Smile) still have sufficient network capacity to craft an interesting niche for themselves.

    Elsewhere in the world Netflix is providing analytics for how well its services stream over different services. In Africa the distance between advertised speed and actual speed is often frighteningly large. Operators have been able to get things like 4G and fibre connections in place but have very little sense of the importance of reliability. An assessment from a high-bandwidth service provider like Netflix would go a long way raising the bar.

    So the currently rich and diverse VoD platform market is unlikely to be decimated any time soon but overall, everyone now has to up their game.

    More on Netflix at the end of this article..

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