Video on-Demand (VoD) platforms have been having a field day in the media circle in recent years, changing the way content consumers watch their favourite shows. However, leading the streaming wave and disrupting consumers’ behavioural pattern is Netflix, a company that was once put up for sale.
Netflix as the Goliath
Netflix started out as a DVD rental company in 1997. However, since it began streaming in 2010, it has caused a major disruption in the media business, forcing its Pay-TV rivals to restrategise, as its onslaught encouraged a cord-cutting campaign among TV viewers in Western countries.
The growth of Netflix, aided by its romance with content creators, forced cable companies to put aside their rivalry and engage in boardroom meetings that eventually led to mergers and acquisitions. Notable consolidations include Comcast’s $40 billion takeover of Sky Media and AT&T’s $85 billion takeover deal for Time Warner.
The shock wave that hit the media space in Europe and the United States is currently spreading through Africa, Nigeria specifically, causing the likes of DSTV to have cold feet concerning the future of Pay-TV in Africa. While MultiChoice, the parent company of DSTV, currently dominates the media business in Africa, the penetration rate of Netflix signals the end of Pay-TV.
To secure its position in the media business, MultiChoice has been trying to rejuvenate Showmax, its online subscription Video–on-demand service that was established in 2015, repositioning Showmax to compete against Netflix. The Pay-TV, however, seems to be fighting a lost battle.
[READ MORE: Kwese TV finally shuts down]
The war of subscription plans
Both Netflix and Showmax run an online subscription payment model, though with differences.
Netflix offers subscribers three different payment plans: Basic, Standard, and Premium, which cost N2,888, N3,610.99 and N4,333.91 respectively; each offering perks according to the payment plans. Showmax provides only one subscription plan at N2,900.
To lure subscribers, both companies offer free trials for particular durations, which give prospective subscribers insights to the catalogues of entertainment content available on both VoD platforms and help them in making their subscription decisions.
But while Netflix offers a free trial period of 30 days, Showmax has a 14-day free trial period before charges begin for subscribers. However, they both offer options to opt-out, with no commitments or tie-down contracts to force subscription on subscribers.
Why MultiChoice is losing subscribers and content to Netflix
Battle for content: The number of catalogues, the quality of series and movie shows depend on the spending capacities of streaming platforms. For Netflix, getting the best content and production is a walk in the park because of its financial firepower.
The streamer was estimated to have spent about $12 to $13 billion on content in 2018 for about 82 new feature films. 85% of the 2018 spending was earmarked for original series and movies (Netflix Originals). Also, according to Goldman Sachs’ projection, Netflix is expected to spend $22 billion by 2022.
The company signed contracts with Barack and Michelle Obama, comedian Kelvin Hart, Singer Taylor Swift, among many other celebrities, and top Hollywood production outfits like Warner Bros, Universal Pictures, and Sony Pictures Entertainment to provide content for its library. Netflix offers more than 140 million hours of TV shows and movies per day.
For ShowMax, the amount spent, and the number of films produced are not known. MultiChoice (where ShowMax gets its content) is planning to produce 29 local dramas and 52 local movies by 2020 through its Africa Magic subsidiary. The company depends on foreign cable TV companies for western movies that have passed their peak periods.
[READ ALSO: How Cable TV could die in Nigeria]
Will DSTV’s legacy hurt ShowMax?
Nigerians now prefer up-to-date cinema-standard content but ShowMax isn’t really offering subscribers anything new apart from recycling entertainment shows from DSTV. Netflix has liaised with non-sport content creators for consumer-driven shows, leaving MultiChoice with low budget Africa Magic movies. Even cinema houses are struggling to premiere movies as the US streamer continues to acquire exclusive rights to new movies.
While there is no Netflix record for the Nigerian market, the impact of its content reflects in South Africa, where about 300,000 to 400,000 subscribers are attributed to Netflix, with DSTV claiming to have lost more than 140,000 TV subscribers between 2017 and July 2018 to the company. So, despite ShowMax priding itself as the streamer with the largest movie collection in Africa with 25,000 programmes, Netflix’s updated catalogue of exclusive TV shows to movies, music concerts, docuseries and comedy specials are most preferred.
However, DSTV’s legacy could also be ShowMax’s key driver in the streaming market in Nigeria because DSTV’s dominance of over 15 years has remained solid. The addition of consumer-driven content such as live sports events, reality shows like Big Brother Naija and its household drama, ZeeWorld, onto its catalogue could be a game-changer for ShowMax. This will later position the streamer as a total package compared to Netflix but when this will happen remains unknown.
“We are uniquely positioned to deliver a quality video-on-demand service to customers, due to our access to a broad range of content (original local content, live sport and the best international content); strong partnerships (telcos, distributors); well-developed payment solutions; competitive pricing, and comprehensive coverage of connected consumer devices,” MultiChoice told Nairametrics.
[READ FURTHER: Why MultiChoice is suspending plan to sack 2000 employees, for now]
Netflix is a profitable alternative
The romance between African filmmakers and MultiChoice’s Africa Magic is under intense pressure from Netflix’s tech money because a part of Netflix’s billion-dollar content spend includes Nollywood and African entertainment industries.
In addition, movies and TV series on Netflix get nominated for award considerations, with over 120 international nominations since they began streaming. This is because Netflix introduces movies to over 190 markets (countries) regardless of their origins. This audience strength, award consideration and sizeable funding opportunities are what make Netflix a destination of choice for film producers and content creators.
Speaking to Nairametrics on the value of Netflix, Nollywood actor, Greg Ojefua said, “Many producers out there are setting out to do a movie for Netflix because it is more profitable than many of the available outlets now. For the cinema, to do proper promotion and marketing for the movie will take a lot and there’s no guaranty that the producers will make their money back… Netflix just wants a great story, you to meet up with their technical specifications; have solid content.”
Initially, Netflix only acquired movies after their cinema debuts but now, the company has begun to acquire the sole rights to movies right from the production stage. In Nollywood, it started with Genevieve Nnaji’s Lion Heart, and Netflix further acquired exclusive rights to Kunle Afolayan’s Mokalik.
Netflix has a loophole that favours ShowMax
It might be too early to rule Showmax out, considering the penetration rate and the positioning of MultiChoice and Africa Magic in Nollywood. The standard of Netflix makes it difficult for many of Nollywood content to be eligible for viewing on its platform, and this limits the number of local content in its library.
So, MultiChoice’s ShowMax is a lifeline for low budget movies, which the South African streamer has been catering to with Africa Magic. Ojefua also attested to this, stating that every market has its audience.
“The truth is, like I will always say, there’s a fan for every song, So I don’t see much changes in that line. Netflix has always existed. Iroko, Ibaka, all the other Pay-TV have always been there. All I see happening is that, Yes, Netflix will attract more African or Nigerian contents, but I don’t necessarily see it affecting the business of the others,” Ojefua said, as he believes that Netflix can’t solely satisfy the need of all Nigerians.
Also speaking on competitors impact, MultiChoice said, “We believe that competition is good as it offers consumers more choice and the ability to pick and choose services which suit their viewing needs.” However, the increase in competition splits content concentration more, increasing consumers spending, as they will have to subscribe to numerous services.
But with MultiChoice struggling to keep its subscribers in Nigeria, and South Africans engaging in cord-cutting, as well as prominent filmmakers favouring Netflix for distribution of their contents, MultiChoice’s Chief Executive Officer, Calvo Mawela has called on regulators to regulate the streaming market as the company seems unlikely to survive Netflix’s onslaught – but the promise of a total package service might be its VOD’s lifeline.
[READ MORE: MultiChoice is blaming customers for its plans to lay off 2000 workers]
Multichoice is feeling the same WRATH they made their competitions go through in recent past!
Now, their coo is asking for regulation in the sector, is that not funny!.. it is good they now have a richer competitor if not, a equal one.
The battle will be a customer delight.
For far too long DStv has given customers substandard and repetitive content for continuously increasing prices. It’s good to see their monopoly threatened. This will be a field day for the usually dissatisfied content consumer.