ShowMax admits that the Naspers' subscription video-on-demand (SVOD) service launched in August in South Africa may be premature but says it will grow, revealing that the beginning is an "uphill battle" as it targets millennials.
With a sudden flurry of VOD services launching in South Africa, they're seemingly running intro financial trouble as quickly and discovering just how difficult it really is going to be to break through, luring and keeping users while bleeding millions of rands having to pay for content acquisition.
While ShowMax's launch was followed by China's PWWC Global's OnTapTV.com in September, Altron's Altech Node was a dismal failure shuttered after a year.
There's also huge uncertainty over The Times Media Group's unsuccessful VIDI that's under huge pressure and struggling with poor uptake with Tiso Blackstar that announced it will exit the embattled VIDI within months with little clarity of where that leaves VIDI that launched in September 2014.
It's all happening before the launch of global video streaming giant Netflix that told TV with Thinus earlier this year that it will definitely launch in South Africa before the end of 2016.
"Broadband penetration is quite limited in the South African market. So are we premature? Maybe"said Candice Carlisle, content acquisitions and planning manager at ShowMax.
"But there is a market currently that is consuming content online and it's only going to grow as the telecom's role out their data packages and wireless and as broadband penetration is increased, we will grow off the back of that."
"So that for us is a challenge. But if you have an uncapped line, absolutely. As soon as the telco's grow, we will grow with that."
Candice Carlisle spoke on [ED] (DStv 190), the educational TV channel from Urban Brew Studios, broadcasting daily this week from Discop Africa 2015, the TV content market.
"It is very challenging being in the video-on-demand (VOD) space, but it is where content consumption is going. That is the future of instant gratification watching. It is challenging but we're in it for the long run. We've got over 12 000 hours on ShowMax so there's no shortage of content to watch."
"We've just launched, so we're speaking to quite a small percentage of the South African audience who can afford a decent uncapped ADSL line - a million households possibly, with internet penetration."
"We're speaking to a very small percentage of the market now but you've got millennials who are our core audience," said Candice Carlisle.
"The early adopters; they're onboard. They're streaming our content, we've got positive, rave reviews from them and it's growing on a consistent basis. Will they get to where our linear guys are tracking pay-TV [viewership] numbers? It's going to take a while, absolutely."
An expensive task
"It's quite an expensive task," said Candice Carlisle about setting up, launching and running a SVOD platform like ShowMax.
"There's a huge amount of investment that goes into it - specifically content. The content - it's a pretty penny that you're paying for it, and rightly so. So content costs. You then need to market. You need to market the content, but you also need to educate the consumer. So huge amounts of investment from a marketing perspective."
"And then operationally - just actually launching and the actual system that works and is easy for your end-consumer to use. It's a substantial amount of investment that goes into this. You can't be an in-and-out kind of player," said Candice Carlisle.
"Unfortunately what we will see in the coming months, in the coming years, there will be people that will drop off. Not everyone's going to be in this game in 5, 10 years' time."
"For ShowMax in the beginning stages it is a tough, it is an uphill battle. We will get to a point where we want to get the [user] numbers, which will then deliver. It's the scalability. It's getting the subscriber base that makes this business worthwhile," said Candice Carlisle.
Candice Carlisle said ShowMax is very strategic in terms of who the SVOD service is targeting. "We focus specifically on your higher, upper LSM's who can afford the platform".
Safeguarding windows
"We work with international partners, the studios and local producers. There are very strict guidelines and windows in place to protect the viewing journey from theatrical [release] through to pay-TV."
"From a legal perspective the studios have been doing this for years with the likes of Netflix and Hulu and Amazon Prime and all those, so we work within those parameters," said Candice Carlisle.
