The rise of SVOD: Africa’s homegrown Netflixes

Africa has seen the launch of a significant number of SVOD services over the last couple of years. Despite challenges related to affordability and connectivity, the appetite for content and growing penetration of smartphones means that the region has potential for growth. Stuart Thomson reports on recent activity. 

Largely thanks to the example of Netflix, the subscription video-on-demand model has dominated the debate about how best to make money from video as viewing patterns shift away from linear TV towards time-shifted viewing.

Africa has not been immune to the shift. The absence of the kind of technical infrastructure that is required to support SVOD across much of the continent, low disposable income levels and difficulties in securing payment for services have not deterred a number of players from entering the market.

In order to mitigate the risks and challenges associated with on-demand offerings in Africa, these companies – although very different in the markets they specifically target and in many aspects of their strategies – have embraced a number of common approaches. They have looked to deliver services that are geared towards viewing on mobile phones, they have looked to provide download capability as well as partnerships with telcos to get round bandwidth and affordability challenges, and they have targeted the African diaspora market as well as local audiences.

ShowMax: mobile optimised

South Africa-based ShowMax, the SVOD service backed by Naspers, the owner of the MultiChoice pay TV service, is currently available in 55 countries, including 28 outside of Africa, where it is targeting the diaspora.

Within Africa, ShowMax has a localised presence in only two of its African markets currently – its home market of South Africa and Kenya, where it launched in October.

According to Richard Boorman, head of communications at ShowMax, the service as it was originally conceived was designed for viewing via both fixed and mobile networks. However, for Kenya, the company launched a version that was specifically aimed at mobile users – ShowMax Select. “ShowMax Select was designed as mobile-first. It is lower-resolution video, which works for smartphones and tablets,” says Boorman. For the full ShowMax Premium service, viewers can opt for one of three resolutions for the streaming version of the service, depending on the availability of bandwidth. Select users can opt for the lower two resolutions.

ShowMax also offers a download option – seen as key in Africa because of the patchy availability of connectivity at speeds that support streaming, as well as the cost of bandwidth – with four file size options. Again, the Select option provides the smaller two file sizes. ShowMax Premium is available in Kenya for KES880 (€7.70), while ShowMax Select costs KES330.

“Kenya is a very interesting market – it is quite large with rapidly growing connectivity,” says Boorman. He adds that launching SVOD in the country is nevertheless challenging thanks to a low level of fixed network connectivity and reliance on mobile. “We wanted to get ShowMax Select up and running there first because it is a challenging market, and we can then apply the learning from that launch to other markets,” he says.

Despite the mobile focus of the Kenyan launch, ShowMax has taken a broad-brush approach to distribution. The service is available on a wide range of devices, including Apple TV, Chromecast, Hisense, Samsung and LG smart TVs and the DStv Explorer advanced set-top box in South Africa.

The company has also looked to team up with local mobile and fixed-line telcos to further its distribution goals and provide packages that get round the challenges associated with affordability in markets where disposable incomes remain low. In South Africa ShowMax has a deal in place with Telkom whereby the latter will offer an ‘entertainment’ data package including support for ShowMax streaming for ZAR99 (E6.50), with users paying the monthly ShowMax subscription fee on top. In Kenya, ShowMax has teamed up with mobile telco Safaricom and Boorman says that exclusive data packages will be part of this. It has also teamed up with mobile payment specialist M-PESA for payment services.

Data remains a key challenge, though Boorman believes that this is shifting, with prices steadily falling, driven by campaigns such as the #DataMustFall initiative launched in South Africa in September.

Boorman says that ShowMax Select offers a 50:50 mix of local and international content, while Premium is more heavily weighted towards international content.

“We are not trying to be the Netflix of Africa but the ShowMax of Africa. We want to be a great platform that is localised in terms of payment and also content. We have a content team on the ground in Kenya,” says Boorman, who adds that people will take more than one service if prices are attractive enough. “This is not a zero-sum game,” he says.

iROKOtv: Nollywood bet

ShowMax, despite its heavyweight backing, is only one of a number of SVOD initiatives in Africa. iROKOtv initially targeted the diaspora audience, but has more recently focused its attention on building a base in Nigeria, home of Africa’s homegrown Nollywood movie industry.

According to Jason Njoku, iROKOtv’s founder and CEO, the Nigerian market, the fastest growing in Africa, offers a solid base on which to build the service. iROKOtv has concentrated on offering Nollywood content, and for the last couple of years has focused on distributing to Android smartphone users.

“A lot of the changes we made two years ago have started to yield results,” says Njoku. “We started by targeting digital natives and the diaspora audience – and we still have that – but we have also shifted aggressively to targeting Android users in Nigeria, which is still the fastest growing region in Africa.”

iROKO, which now has its own Nollywood studio business as well as licensing content from other movie houses, has also moved into offering linear channels as well as SVOD.Most recently it launched ROK, a Nollywood channel that is available on Sky in the UK as well as – from November 1 – DStv. iROKO also already distributes two channels on the StarTimes platform.

Njoku says that ROK is positioned as a premium service that carries the ROK studio’s large output of movies and series. DStv will carry it on its higher tiers. “Our movies went direct to DStv but the studio has so much content – 100 movies and 10 series this year – that it made sense,” says Njoku.

Regarding iROKOtv, Njoku says that the biggest challenge is not content but accessibility. However, with four telcos competing for business in the Nigerian market, mobile data costs will continue to fall, he argues. He says that 90% of traffic is to Android devices and the primary mode of viewing is via download rather than streaming. “One of our key things is download first. We actually hide the fact that you can stream the content. What happened in the past was that when you pressed play you handed the experience over to the telco. A download takes less than 60 seconds and we can control the experience,” he says.

iROKOtv is focusing its marketing efforts in the greater Lagos area, home to about 20 million people as well as Nollywood. However, the company recently also teamed up with Canal+, which participated in iROKO’s funding round at the start of this year, to launch an Android-based service for Francophone Africa that includes telenovelas and content from Canal+’s A+ channel as well as Nollywood fare.

“One of the key things for us is trying to understand how French-speaking Africa differs from Lagos,” says Njoku. The company is making use of Canal+’s eight and a half thousand points of sale to expand into a region where it had no presence previously, and Njoku says that it will learn a lot from the experience that could then be applied to the domestic Nigerian market.

“We are now a broader media player than we were. We are balancing our revenues with a diversified customer base that we can introduce to linear channels and then take them to digital,” says Njoku, who adds that linear TV is likely to provide the biggest revenue stream for the company. While the company faces a number of significant challenges – including an economic recession in its home market and growing competition from rival players – he is confident that iROKO’s focus on building its own pipeline of Nollywood content offers a recipe for success. iROKO currently offers a roughly 50:50 mix of own-produced and acquired content and NJoku has the ambition of taking the homegrown element to 85%.

Afrostream: big bang expansion

Afrostream, another subscription video-on-demand service that has set itself the goal of being the ‘Netflix of Afro-American and French films’, has just kicked off a major international expansion that saw it launch in 24 countries across French-speaking Africa.

The expansion of Afrostream’s availability marks its first major move outside Europe, where it is available in France, Belgium, Luxembourg and Switzerland, as well as the French overseas DOM-TOMs.

The service, which delivers a mix of Afro-American, Caribbean, African and French content for a monthly fee, will henceforth be available in Benin, Burkina Faso, Burundi, Cape Verde, Cameroon, the Central African Republic, Chad, the Cormoros, the Democratic Republic of the Congo, the Republic of the Congo, Côte d’Ivoire, Djibouti, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Madagascar, Mali, Mauritania, Mauritius, Niger, Senegal, the  and Togo.

“From the beginning, we’ve had the content rights for these countries,” says Afrostream co-founder Tonjé Bakang, adding that the service would be able to distribute about 95% of its line-up across all territories. Afrostream’s content deals include agreements with Disney, Warner Bros, Lionsgate and Viacom as well as local broadcasters – such as RTI in Côte d’Ivoire, where the service was soft-launched in June.

In addition to on-demand content, Afrostream is also offering live streamed TV, including, thanks to its partnership with Viacom, a live stream of the French-language version of US black channel BET. “We are the only platform with on-demand and live streaming together,” says Bakang. Following the live-stream of BET, he says that Afrostream is now in talks with five other players, including national TV channels in Africa, to stream their content live too, Bakang says.

Afrostream will be available from XOF500 (€0.75) for a day pass or XOF1,000 for a week pass, with monthly subscriptions also available. Payment will be by credit card in the initial phase – a payment mechanism with minimal penetration in the region – but Bakang says that payment via Orange Money and other mobile payment systems would be available within a couple of weeks.

Bakang says that he also expected some revenue would come from members of the African diaspora purchasing the service as a gift for relatives back home. “People from the diaspora can pay a subscription via an account for their families anywhere in Africa,” he says.

Afrostream will also team up with telecom operators to provide easier access to the service in a region where cost of data and availability of adequate bandwidth are generally seen as major obstacles to OTT TV delivery. “Orange is one of our major investors and we’ll soon have special data plans with them,” says Bakang. To overcome bandwidth issues, some titles will be available for download, but Bakang sees this as an interim measure. “The quality of the internet is improving, and while download is necessary for now, there are other ways to distribute, for example by providing WiFi or in partnership with mobile telecom operators,” he says. “We are a technology company and we are working on ways to provide smaller sized files to stream movies and series more efficiently.”

Afrostream is aiming to provide a broad-based entertainment offering, and this will include an investment in original production. Bakang says that two series are currently in development – a Nigerian-set drama featuring “a young poor guy who ends up by accident with a rich Nigerian family” and another, bigger budget project set among the Nigerian diaspora in the UK. While those two projects are being developed in-house, he says that Afrostream is also currently talking to potential partners about co-production opportunities.

Bakang says that Afrostream would focus on expanding its reach in French-speaking sub-Saharan Africa initially, but that an expansion to other parts of the continent, including English-speaking markets, could follow within months.

“Our goal for the next five years is to increase subscribers in Africa. It is a growing market – there is huge potential in West and Central Africa, in both French and English-speaking markets,” says Bakang. “I know what the demand is in France, the UK and the US, but in terms of opportunities I think that Africa is where we have to put all our energy.”

Trace Play: urban filter

One of the latest companies to throw its hat in the African SVOD ring is youth and urban music-focused broadcaster Trace, which is set to launch its long-awaited Trace Play SVOD offering before the end of this year.

According to Trace founder and CEO Olivier Laouchez, Trace Play will ultimately be available in English and French in 100 countries. Trace, which has built a business with a focus on urban culture and music as well as sports celebrity news, has acquired additional content rights through its purchase of African SVOD provider Buni TV, which is now fully integrated into the group, according to Laouchez.

Trace Play will be UK-based and Ofcom-regulated. The platform will include Trace’s total offering, encompassing its suite of linear channels as well as VOD. The company recently expanded its bouquet of channels by launching three regional music services – Trace Africa, aimed at southern Africa, with a mix of music videos, specials and documentaries covering genres including Kwaito, House, Coupé-Décalé, Afropop, Rumba and Ndombolo, Trace Mziki, targeting eastern Africa with a mix of music including Ugandan and Tanzanian hits and genres such as Bongo Flavas in Swahili and English, and Trace Naija for West Africa, spanning genres including Afrobeats, Afropop and Hip Life. The channels were initially available on DStv, but Trace recently struck a deal to distribute Trace Mziki on Kenya’s Zuku TV along with its existing Trace Gospel service. 

Trace is also planning to expand its original content line-up by commissioning new series. Four series are currently in production, including three in the US, one in the UK and one in France. Laouchez said that the group is making a significant investment in content and is also discussing two additional series, one in the Caribbean and one in Africa. “We are making a significant investment – we saw it as necessary to launch not just with content that has been watched by the audience already. We have a strong component of original content and we are acquiring more. It will take a long time to find that, and we will also acquire some existing content,” says Laouchez, who adds that the content mix will be broad but selected through Trace’s ‘urban’ filter.

Laouchez says that Trace Play will be available in the US as well as Europe and Africa. “We are targeting everyone interested in urban culture,” he says. While the content mix will include movies and series as well as music programming, music remains core to its offering. “Our music offering has the biggest line-up of channels dedicated to African and Caribbean music there is, and this will be a unique selling point for the platform,” says Laouchez.

He admits that launching a VOD offering in Africa is complex, because of bandwidth, connectivity and billing issues. However, he says that Trace would work through these areas and adds that the early phase of the launch is likely to involve a learning process, with work still being done on elements like billing mechanisms. “We are taking it step-by-step. We are going to learn. There are things that we don’t control 100%,” he says. Trace is launching in a number of countries outside Africa as well, targeting a diaspora audience as well as anyone else interested in its content, which will help mitigate the risk. For Africa, as with ShowMax and iROKOtv, Trace will offer download capability to overcome the challenges associated with streaming. However, this will not be extended to the music offering because of rights issues.

“We are looking to offer a mass-market product that will give us the scale to invest in original content,” says Laouchez. “We want Trace to be the number one global urban entertainment platform. Urban culture is not a small niche. Most contemporary entertainment in Africa and the Caribbean will fit into this filter. The great thing about urban music and culture is that it goes beyond hip-hop and R’n’B music and so on – it is a form of expression for young people all over the world and it is inclusive.”

Within this context, some Nollywood content and even telenovelas may have a place in the mix. Indeed, Laouchez says that Trace is talking with iROKOtv about taking some of that company’s content. Laouchez says he would like to see Trace Play acquire “a few hundred thousand” subscribers in the first few years following the launch.

Many other companies are experimenting with SVOD in Africa, competing but in some cases collaborating with each other. Technology provider Ericsson earlier this year launched its own SVOD service, NuVu, in partnership with mobile operator Airtel, offering a mix of content from international distributors, but also licensing content from both iROKO and Trace. Ericsson positions NuVu as an end-to-end SVOD platform aimed at mobile operators. Other providers active in the region include south-east Asian player iFlix.

Trace’s Laouchez says he expects further consolidation of VOD platforms in Africa and expects Trace to be a consolidator in the region. “The African market has a billion people, and there are lots of Africans living in the US and Europe,” says Laouchez. “We still need to build this market. It is important to find a vertical and a business model that makes sense.”