Tuesday, May 19, 2015

Vodacom and Naspers talking about sharing DStv video content; looking at customers paying a fixed amount for video data instead of per megabyte.

Vodacom and Naspers are having discussions about the possibility of letting their South African customers download movies and episodes of TV shows but paying a fixed amount instead of the exorbitant data costs per megabyte which has held back the uptake and growth of video-on-demand (VOD) and other over-the-top (OTT) services.

Bloomberg reports that Vodacom is having talks with media and TV company Naspers to bring DStv video content through its pay-TV platform MultiChoice to mobile devices like smartphones and tablets.

A deal between the big companies could bring new impetus to South Africa's severely constrained and lagging broadband infrastructure and investment.

The roll-out of new services and video-on-demand growth in South Africa have been slow, hampered by years of government inaction and incompetence, as well as bureaucracy at the country's slow-moving broadcasting regulator.

The consumer uptake of video-on-demand (VOD) and OTT services in South Africa, as well as things like digital video mobile broadcasting or DVB-H, have been severely held back the past decade due to a slow-moving and constricted regulatory environment.

On a practical level, limited broadband availability and roll-out for instance has resulted in extremely high data costs involved for ordinary South African consumers who are scared to make use of it and also don't have the money to pay for it.

With expensive uncapped internet connections in the minority in South Africa, consumers with restrictive capped connections and slow connection speeds who want to use even a little bit of data to make video calls or watch video like a movie or TV shows, quickly run into debilitating price points where making use of these services become too expensive.

Besides paying a rental fee per movie release or making use of VOD services, South African customers are burdened with the additional high cost of the actual data used which is quickly gobbled up when accessing video downloading and streaming services like Times Media's VIDI, MTN's FrontRow or MultiChoice's DStv Catch Up.

Last week for instance, Altron TMT admitted that it's Altech Node which it launched in September 2014 was an flop, with sales for the expensive video-on-demand (VOD) set-top box (STB) and service "below expectations with regard to retail customer take-up".

MultiChoice for instance warns DStv subscribers watching video on tablets and smartphones that it recommends uncapped data accounts because "downloading video consumes large amounts of data so please be aware of your data package limits and costs".

It comes as the global VOD streaming service Netflix plans to enter South Africa soon as a new competitor and market disruptor. Netflix told TV with Thinus in January that it plans to be operational and definitely available to South African customers before the end of next year.

According to Bloomberg, Vodacom and Naspers are now considering allowing customers to download a movie or show to a smartphone or tablet for a fixed fee instead of "billing per megabyte".

A deal would mean that customers would be able to download DStv on Demand movies and shows through Vodacom for a cheaper fixed price, without the insanely high cost that comes with the data use of a 500MB or more movie download or streaming, in addition to the rental fee.

Shameel Joosub, Vodacom's chief executive officer (CEO) told Bloomberg that Vodacom - which recently shocked and angered consumers with a unilateral tariff hike from May - plans to sell its own video content to customers. "That's where we'll evolve," said Shameel Joosub.

A deal between Vodacom and Naspers would be the first new big partnership between the two since Vodacom started selling the two DStv Select bouquet offerings from MultiChoice in June 2007, a packaged product agreement which was terminated in late 2011, with legacy DStv Select subscribers being phased out.