»More than a decade ago Telkom wanted to enter into the pay television foray. At that time the Soccer World Cup 2010 was just around the corner and there were pay television companies being set up to benefit from that sporting spectacle such as ODM (On Digital Media) and Sentech. Some of these licensed companies efforts would never see the light of the day despite the acquisition of licenses. Such were Telkom and Sentech’s efforts. Naspers Multichoice’s DStv established in 1995, was dominating the space as it is presently and sports coverage was, as it is today, its bargaining chip. Its future was secured«  

On the eve of the Soccer World Cup 2010 On Digital Media’s Top TV launched. When one look at the hype that surrounded the launch of Top TV one can easily be persuaded to suppose that the defection of some DStv subscribers to Top TV and the initially subscribers  was merely in search of an affordable if not alternative pay television service offering that would expose viewers to the 2010 Soccer World Cup. Top TV, besides the hype built around its emergence, will go on to see the enthusiastic subscriber base it garnered upon its launch tank over the years following the conclusion of the 2010 Soccer World. It would go on to morph into StarSat following business rescue interventions.

The framing narrative behind the scenes of this ensuing rush to remodel the satellite pay television landscape was the floundering of the South African Broadcasting Corporation to our nation to provide a free satellite television service promised at the confirmation of the hosting of the 2010 Soccer World Cup. Although the switch to DTT (Digital Television Transmission) will miss 2010 the broadcaster was persuaded by international broadcasting standards to become compliant with digital broadcasting standards and initially announced its switch to DTT sometime in 2011. The SABC went on to miss this deadline. As the 2010 Soccer World Cup became a distant memory a new era enveloped South African Pay Television services, the so called OTT’s (Over The Top services) which allowed a viewer to stream television content over the internet as long as they had a device that had internet connection.

That era saw the emergence of VOD (Video On Demand) service providers such MTN VU, Times Media Group’s ViDi, Altech’s Node, ONTAPtv and Naspers Showmax (for someone who is starting to care about the future of television Showmax and DStv are directly related through Naspers). The international, Netflix, arrives later on our shores following the demise of VU, ViDi and the Node. The demise of VU and ViDi can be linked to the costs of data in South Africa which resulting in the slow adoption of consumers to internet based platforms however the closure of Altech’s Node is one of the mysterious effects of market unresponsiveness to a product with regards to its positioning in the public’s mind; it was launched as a higher income earners device.  The Node was using the same satellite configurations used by DStv and Open View HD. In my own opinion South Africans love their local television content. Perhaps if the Node carried some of it with the price tag it strutted upon its launch it might have averted its failure. The death of the Node, as I have written elsewhere paved a way to a fully fledged platform such as Showmax. We see a return to the Node’s full architectural iteration today wherein a premium subscriber for DStv has access to the VOD library content from Showmax as long as their PVR is connected to the internet.

With Showmax then Naspers which also owns DStv has learned some lessons in the OTT Service business with regard to VOD. So then its announcement on 1 September 2017 that it will merge Showmax with DStv Now should not come as a surprise seeing that there is no one to compete with it in both international and local content provisions in Sub Saharan Africa.  While at certain points in these developments it appeared as if Netflix had come to threaten the space that Naspers Multichoice’s DStv (just for a little emphasis) has enjoyed when it announced its South African penetration come 12 January 2016 henceforth the setting up of Showmax by 19 August 2015; Netflix cannot threatened the space that Showmax has enjoyed. Showmax has something of fundamental value that Netflix does not have, local content offering.

What is of interest here is that when you look at Showmax, DStv Now and Netflix as OTT’s they can only be accessed via the internet which means you need to buy data besides the fact that you need to also pay your subscription for them separately as services in order to enjoy their content library. The Node was a great idea because you had your dish which beamed content directly to your set top box and you did not have to pay for data costs. However with OTT services like Showmax, DStv Now and Netflix besides paying for their subscription you need access to the internet to enjoy them. This is a hurdle that hamper would be adopters from fully going OTT.

Telkom positioned itself as an answer to this challenge by making data costs affordable. We saw this with the packages it rolled out a few years ago for its ADSL line owners wherein they could subscribe to what was called Entertainment Bolt On and have dedicated data allocated to streaming videos from OTT service provider such as Showmax. Unfortunately the package was not as beneficial to the LET users. For instance while it allocated 100 Gigabytes for streaming for its ADSL line customers, it only allocated 10 Gigabytes to its LTE customers. That was one of the two issues I noted with that product. Perhaps, just like any other business will do, they were looking out for their loyal clients. The other issue was that for viewing or streaming videos you were only limited to Showmax otherwise for other OTT’s such as Netflix and Google Play Movies you would go on your normal data allocation. As an LIT user through a wireless modem this is what I was subjected to.

With the launch of LIT it appears that Telkom’s R&D team have finally come up with a better response to a precarious battlefield landscape wherein data wand sticks are being flaunted and size of how much data you can bestow upon your customer matters. LIT is a dual response both in a platforming sense and data allocation parameters. This is punctuated by the device the customer gets when they subscribe to it called LIT TVC 100 Android Box. With it the internet provider does not have to compete in the pay television colosseum, rather it can now curve its own niche in platforming as far as application hosting of OTT’s services is cocnerned. Put differently the LIT TVC 100 Android box comes with applications such as Showmax, YouTube, DStv Now and Netflix for video on demand which the consumer has to register and subscriber to but it will allow you to stream content without depleting your normal data allocation.

In a sense then the LIT TVC 100 positions Telkom differently and advantageously compared to ten years ago when it wanted to enter the pay television service foray. A space wherein it is doubtful it would have survived when one counts the casualties we have seen drop dead in that space. If you think about the LIT Home Packaging of R 789.00/M X 24 for 50 Gigabytes during daytime and 50 Gigabytes at night and R 1089.00/M X 24  for 100 Gigabytes during daytime and 100 Gigabytes at night it is a positioning which is within premium and lower bouquets by pay television standards should we use DStv as a barometer. However the added benefit here is within the data consumption context in that you get data dedicated to streaming music and video from OTT’s service providers and only when that allocated data is depleted do you move into your normal data package. Henceforth it is flaunted as a double data deal.

The LIT TVC 100 Packages then turns your home into a connected hub both in entertainment and productivity, concretely. Gradually Naspers through both DStv Now and Showmax has made its way into the OTT environment and Telkom LIT TVC 100 will provide one of the ecosystems within which it can thrive amongst other OTT’S. Make no mistake that the other internet service providers will hanker into the OTT’s application platforming over time; perhaps by platforming rather than erecting a new OTT service similar to Showmax or Netflix for that matter. It is a matter of how they will find their way there which will be of interest to those who care about the future of television. This is the new frontier that is opening up and Telkom dictates the way through data provision and platforming.

For Telkom the only threat or disruption that exists can come from the state. It is the government decision to sell Telkom’s shares in an attempt to fan into life the dying flames of the South African Air Ways that could hamper its innovation. It remains to be seen whether that will have a negative impact or bolster its economic growth. The shape of war to come will emerge when ‘other players’ such as Vodacom, MTN and Cell C enter the new battlefield and even then it will be a question of what will they be responding to?

 

Late Spring

10 November

© Mmutle Arthur Kgokong 2017