SA pay TV: questions and reflections

This formed part of a ‘Roadmap for Pay TV' discussion organised by the Link Centre yesterday, Thursday 8 November 2007, at Wits Business School in Johannesburg.

According to a report by PricewaterhouseCoopers Global Entertainment and Media Outlook, globally the total revenues of TV sector amounted to £164 billion in 2005, and local press reports said in June that Multichoice Africa had collected more than R85 million in pay TV revenues this year alone.

These figures clearly demonstrate why there was a scramble by 18 hopefuls to get an ICASA pay TV licence. But now it has emerged that the successful applicants might be racing into unchartered territories as a spiky road lies ahead.

Serious challenges

“There are serious issues confronting new entrants ahead of next year. Do you please advertisers or consumers, how do you get the message across to the masses and fulfill social obligations, cater for different platforms (satellite, IPTV, mobile TV and web-TV) and so on,” Rikus Matthyser, Telkom Media chief strategy and operations officer, said.

“Of course, one has also to consider the quality of service (interactivity of satellite), digital rights protection, must carry and carriage, ability to target existing users, access rights and exclusivity.”

Telkom Media, which is a subsidiary of Telkom SA Limited (66% of shares), is one of the four new entrants in the pay TV market, and analysts predict a neck-to-neck ‘race' between the company and the veteran operator DStv.

There is also a question of integrity and moral issues, which many believe must be considered in a society torn apart by violence, women and child abuse, state corruption, social inequality and political cowardice.

“Integrity is a heart of any society and our society needs a heart,” Luyanda Mangquku, chief financial officer of Christian broadcaster Walking on Water Television (WoWtv), said.

WoWtv will broadcast normal programmes just like any other pay TV operator, but with a strong focus on moral education and social integrity.

“Our Christian-based message is for ordinary people who love to be entertained, hence relevant for this time.”

Mangquku is the husband of Nontokozo Mangquku, the CEO of WoWtv.

The aftermath

“Success of new entrants will depend partly on whether exclusivity in rights is maintained (sublicensing, selling in packages) and interoperability is mandated,” Prof Richard Collins, of the UK Open University's department of media studies, said.

“SA pay TV market will become more segmented and mature (after shake out) and will also attract advertising and content to detriment of free-to-air market,” Collins predicted.

There are at least eight million TV households in SA, one and half of which live under the ‘monopolistic spell' of DStv, but the burning question is whether everyone can afford to pay the subscription fee even at lower rates.

According to the World Bank, more than half of SA households survive on less than R20 per day and the country is now second in the world after Brazil in terms of widening income inequality.

If financial success eludes new entrants, analysts predict that they might be tempted to look beyond the country's borders – sub-Saharan Africa for instance – where they are likely to meet Multichoice, which is sitting pretty with at least two million subscribers.

“The last resort might be a merger,” Collins said.

Some observers say the race between the five players might engender nasty competition, but Zolisa Masiza, ICASA Councillor, warned against such practice.

“Where the authority determines the holder of a licence has engaged in an act or intends to engage in any act that is likely to substantially prevent or lessen competition by, among other things, giving an undue preference to, or causing undue discrimination against any other licensee, the authority may direct the licensee, by written notice, to ease or refrain from engaging in such act,” Masiza said, citing section 67(1) of the Electronic Communication Act.