Tuesday, December 13, 2011

HOT TOPIC. The fight for the heart of TopTV: As it ponders and pushes for porn, a pay TV operator comes to a crossroads.

Sex not only sells. If you're TopTV CEO Vino Govender you want your company to show it.

From originally family friendly to suddenly wannabe peep show purveyor, there's a big internal fight going on for the heart of the South African pay TV operator that's now pushing for pornography and looking to drive revenue with porn generated profits.

TopTV which has grown to over 300 000 subscribers since its commercial launch in May 2010 has submited an ''application for authorisation of channels'' to the Independent Communications Authority of South Africa (Icasa). If the regulator approves TopTV's pornography plans, the pay TV operator wants to start a separate porn package with a monthly subscription of R199 for 3 Playboy TV channels in 2012.

It's so seductive. So delicious. No ... Not the rated R18 hardcore pornography and bump-and-grind television that TopTV wants to pump to subscribers as a separate new stand-alone package. The money, silly. Like a stripper going for the dollar, TopTV is dancing closer and closer to where it sees the money. For make no mistake about it: There's a fight going on for TopTV's soul and yes, it does start with the letter ''P''. It's not the word pornography however, but positioning.

While any company and any CEO worth their mettle will always see room for growth and further innovation, TopTV is playing with fire in terms of its latest growth plans and innovation - specifically how ODM and its product will be seen in future: either wholesome quality or downmarket sleazy.

Imagine family retailer Pick n Pay saying they're opening a stand-alone, separate aisle in every shop  - one selling (gasp!) sex toys. You don't need to go to the unmarked aisle (ever), but it will be there. A tricky proposition. A company that's built its brand, reputation and original customer base very carefully with patience, care and attention on the needs of middle class consumers who selected it for a specific product mix and keep supporting it because of its offering, might suddenly find a lot of them simply no longer wanting to be associated with it.

And keep this in mind: TopTV has not done a single thing from a consumer end-point point of view in the whole of 2011 to broaden, expand and better its normal commercial offering this year except an electronic programme guide (EPG) download update. Instead of more general commercial TV channels added to the bouquet, TopTV increased prices and subscribers have two less channels while still having to pay the same. TopTV now focusing on, and investing in, a new stand-alone sex channel package whilst having no discernable product and service improvements for normal subscribers, should make alarm bells ring.

It's a bit like buying a family four door sedan, with the manufacturer promising future parts and upgrades. Then the manufacturer announces - after no real betterment for your car - a new sexy two door sportscar: a far departure from the brand you first approached. Will they still work on improvements and value-added stuff for your car seat's upholstery and better lights? Or will they now just focus on the flashy new addition which can be sold at such a higher profit margin? What does it really all mean?

It means that TopTV possibly sees porno channels as its only remaining driver, or a bigger driver of big revenue growth. For TopTV further ''ordinary'' subscriber growth is perhaps to difficult and too slow to come by. The company basically alluded that much in its press statement last week saying ''stagnating to past statements will not serve changed needs from our clients or assist our growth''. TopTV therefore clearly sees the new Playboy TV channels as something to help with its growth.

In pay television of course, ''growth'' means a growing number of subscribers, as well as a growing amount of money paid in subscription fees. TopTV wants a new type of subscriber (those who want to watch sex channels) as well as a higher paying subscriber (those willing to pay for a separate, more expensive monthly subscription).

What's happening is that TopTV as a city and residential planner no longer wants to just map out future residential areas and installing piping, lamp posts and utilities for families. TopTV is concentrating its efforts on wanting to zone a television red light district on its pay platform - a much more seedy yet very lucrative section of a city that requires less infrastructure and cost but which yields big returns for very little cost.

The indirect price to be paid and cost of course is in positioning and reputation. It appears that TopTV has listened, and succumbed to the adult industry's lure, sacrificing the values and market mix it launched with 19 months ago for the clientele and money that comes with an adult channel offering.

Keep in mind that TopTV said in May 2010 that it's entering the market to serve lower income households and to bring pay television to them. TopTV's cheapest entry level bouquet is R99 per month. The new Playboy subscription package will be a separate R199 subscription - 100% more expensive. Which subscriber will be treated better, handled with more care and chased with more intent and focus? The R99 subscriber or the R199 subscriber on which a operator make a much larger profit - derived from the massive mark-up that porn channels or so-called ''adult channels'' come with and which means big money in the pocket of the operator?

While every single other assuption and statement by TopTV CEO Vino Govender no longer holds true and should be disregarded as the company seems fully prepared to chart new waters (If you said you won't do porn, and suddenly you say you have no problem, what statements made by a company or its CEO previously can still be taken with any level of serious credibility?) what remains true is how lucrative sex television is for the pay TV industry.

TopTV's new naked ambition is now to try and cash in on the money to be made from a porno package, despite the growing public uproar and a growing group of upset subscribers. Porn TV channels is the media and television industry's form of nuclear power: very dangerous, profitable, always somewhat secretive, generating unwanted attention, and something nobody really wants to talk about in great detail except to just take the money pushed underneath the door.

TopTV is risking its whole brand premise and its entire brand perception by shaking off its inhibition for porn and unbridled profit wherever its to be found. Of course in South Africa's pay TV market it's obviously difficult as the second pay TV operator to drive subscriber growth as effectively as MultiChoice DStv product. But TopTV now seems willing to give up its hard-won brand markers - monikers such as ''cheaper'' and ''safe'' - for the sake of making money and making it faster. Meanwhile, normal subscribers might feel abandoned as TopTV now runs after sex.

When pay TV operator Kabletown takes over the company in the sitcom 30 Rock, it's what the fictional TV executive Jack Donaghy in an episode dryly-wryly calls ''the goose that lays the golden egg - channels 500 to 600''. He's talking of course about the dirty little secret of the TV business - the  sex channels which is the real money-spinner if you don't really care too much about your name.

If TopTV forges ahead and gets approval for the new channels, it will change the company forever. Having already applied for authorisation and now clearly indulging the more baser, carnal side of its money-making nature, it will be interesting to see how TopTV finally decides to proceed: building loyalty through patiently growing a consumer-considered ''safe'' brand, or going all out, hoping to make a quick(er) buck.