A black Friday as Cell C shuts down its loss-making Cell C black video streaming service after just 2 years.

by Thinus Ferreira

It's a black Friday on Black Friday in South Africa for the struggling Cell C which is shutting down its loss-making Cell C black video streaming service two years after it launched in November 2017.

The mobile operator poured over R1 billion into the subscription video-on-demand (SVOD) service that is the next victim in the vicious streaming wars where it tried to compete in the small but growing market against rivals ranging from Netflix South Africa and Amazon Prime Video to MultiChoice's Showmax and DStv Now, PCCW Media's VIU, DEOD, Vodacom Video Play, Acorn TV and others.

Now Cell C black that failed to generate revenue, will shut down on 31 December 2019, joining a list of previous streamers who shuttered ranging from VIDI and the Altech Node to OnTapTV, Kwesé Play and Kwesé TV, and others.

In an SMS to Cell C black subscribers, the company says it's giving customers a Showmax voucher that will give them access to Showmax for free for 3 months and that the service will shutter on 31 December 2019.

"To fill your entertainment gap, we're giving you 3 months' free Showmax on us," says Cell C black in the SMS. 

Cell C launched Cell C black, accessed through its own set-top box (STB) called the blackBOX, as well as through web browsers in November 2017 but in late-August 2019 abruptly shut down the streaming of all of its linear TV channels, leaving only on-demand programming.

The 40 linear TV channels on Cell C black ranged from FOX and National Geographic, to TNT, Trace and Al Jazeera.

At the time Cell C black told its customers and subscribers that it was "experiencing difficulties which are affecting our live TV channels" that the IT-division is trying to solve - a notice still being displayed on the service's website.

"Our decision to reconfigure our product and services is part of putting the business on the right track," Douglas Craigie Stevenson, Cell C CEO, said in a supplied statement three months ago about the radical reduction in the services offered by and investment in Cell C black.

Candice Jones, Cell C spokesperson, told TVwithThinus on Thursday night in response to a media enquiry that Cell C black is shutting down, saying that "Following a review of the company’s product portfolio and decision to redirect expenditure to revenue generating initiatives, Cell C can confirm that it will decommission its streaming content service, black on 31 December 2019."

"Content remains part of Cell C’s broader strategy, however, we have had to carefully look at how we approach this to ensure we provide a sustainable service that customers want while at the same time offer a service that makes commercial sense to the business."

"The company suspended all linear live TV channels on the platform in September. Cell C will not be accepting any new registrations on the black service, and will be refunding customers for outright movie purchases. Existing customers will be able to use the service until 31 December 2019."

"Cell C is in the process of notifying existing customers on black of its decision to end this service."

Cell C poured R523.9 million into Cell C black during its 2017 financial year and another R523.9 million in content acquisition to buy licensing rights to TV shows, films and the streaming rights to TV channels.

In August 2018 Cell C in a statement said that 2.5 million people had "browsed" through the content on the Cell C black catalogue and sampled some of the offering with 60 000 transactions that had been completed and 260 000 customers who had made use of the free trial option.

In January 2019 Cell C black dramatically cut down its free trial period from 30 days to just 7.

In late-September Cell C in its financial report said that it's cutting back spending on Cell C black by at least R120 million and that it is "reviewing the channel options for the black video streaming service – which will ensure a saving of R120 million annually with additional savings expected as Cell C continues to right-size this business unit".

Douglas Craigie Stevenson said that its investment in the creation of Cell C black was a big mistake, noting that "Cell C black was not the right play for Cell C. We didn't have the resources to compete in that environment."

Netflix: We're not in competition with MultiChoice's DStv says the global video streaming giant as it signals a bigger push into the South African market.

Netflix says it's not in competition with MultiChoice's DStv in South Africa and Africa and that any service offering compelling content to viewers as TV moves into the future, will continue thrive.

Netflix spoke to South Africa media and answered questions from the press at its first Netflix House SA media event in a lux high street Fresnaye mansion in Cape Town this week to showcase and preview it's existing and upcoming content and to hear from the press what they need - something it said it will be doing regularly from now on.

Netflix that has rapidly gained subscribers in South Africa, is making steady inroads as a brand since it launched in South Africa and across Africa in January 2016, where, besides traditional satellite pay-TV services DStv and China's StarSat, services like Naspers' Showmax, Amazon Prime Video, DEOD, ONTAPtv.com and Kwesé Play have made their appearance in a market segment of subscription video-on-demand (SVOD) services that has quickly become crowded.

When the global video streaming service was specifically asked if it's acquiring and licensing TV rights to keep it away from MultiChoice's satellite pay-TV service DStv, Netflix said that it's not acquiring show titles to stop DStv from having access to it.

"In terms of competition, we think there's room for everyone.  For us, competition is anything that's entertainment. So there's room for everyone. We're not saying that DStv shouldn't be around," Netflix told the media.

"In the United Kingdom there's always talk about the BBC and will the BBC end up dying because of Netflix? No. Because they offer something different. DStv has sports. There's always different things in every market and what Netflix is trying to do is to give people more."

Yann Lafargue, manager for technology and corporate communications at Netflix for the Europe, Middle East and Africa (EMEA) region, said that "On demand viewing is just the future of entertainment".

"Competition is healthy. Nobody has the monopoly on great stories. The companies like HBO, Amazon - those who create compelling stories that people like to watch and enjoy - they're going to survive; they're going to thrive."

"The thing that is the key is the exclusivity. If we all have the same content and you can watch the same type of content everywhere - why would you subscribe to some services specifically?" said Yann Lafargue.

"It's because it's a kind of signature show. So HBO has Game of Thrones for instance. So you want to sign up for Netflix because you want to watch Stranger Things or Narcos. And we're going to have more and more of those big hits to keep you entertained and captivated and to give you a reason to subscribe to Netflix."

He said "we know we have much more titles than the competition, but it's not about volume. For us it's not like DVDs on a shelf".

"We're trying to show around 300 shows from your algorithm on your interface. And when you start looking at something, then you will start seeing more suggestions because you like Robert DeNiro shows or something like that."

"Star Trek: Discovery, Designated Survivor - those shows are available here in South Africa on Netflix but not in the United States. So there is this misconception sometimes that it's always better elsewhere, the grass is greener somewhere else, and it's not the case necessarily."

Since last month subscribers of Kwesé Play can currently subscribe through that service to Netflix and be billed in rand by having the Netflix subscription added onto the Kwesé Play account but Yann Lafargue says all South Africans will eventually be able to pay in rand and not dollar.

"It's going to come. It's just a question of making sure that all the modes of payment - credit card, debit card and Paypal - everything could be shifted to rand. As Netflix grows and localises and create partnerships we do see that currency integration".

"What we see in some markets is that when you're new, people don't necessarily trust you. When you're a new brand, people wonder can I enter my credit card details on your website - is it safe?"

"So what's happening is that if you already have your internet service provider or you mobile phone contract, you go 'Okay I don't pay Netflix directly but my monthly bill just adds a line and I pay my local service provider', then it's easier and it removes friction."

"So that's the type of deals and partnerships we're trying to do."

"But pretty soon - perhaps coming in a month or so - we will have a shift to that."


Netflix on piracy and password sharing
Regarding piracy of content Yenia Zaba, the Netflix manager for media relations for Europe and Africa, says "we're not going to physically fight against piracy, we know it's out there, but piracy exists mainly because of two reasons."

"Piracy is there because content isn't accessible in another way, and B, it's not affordable."

"We don't have numbers for South Africa, but in many countries where piracy was really big - the Nordics, Australia - piracy dropped by 30% thanks to Netflix," says Yann Lafargue. "When you make it easy and the quality [of how people can watch it] is better, people move away from piracy."

"And also the frustration when you feel like a second-rung citizen - that was the case in South Africa, that was the case in France, or Germany, where you had to wait 2 years to get a TV show to become available to you, and you really want to watch it because on social media you hear about this great show - you're going to find a way to watch it."

"Netflix gives you a show, it's in South Africa, it's in France, it's in Finland, it's in South Korea, it's in the United States at the same time. So there's no incentive to do it [piracy]. And we also have 30 days for free."

In terms of password sharing between people, Yann Lafargue says "as long as it remains within the family circle I think it's fine. If you have a $7.99 plan, there's only one person who can watch at the same time."

"So if you give it to 10 of your friends, it's good, but if one of them is watching, you will be locked out of your own account. You won't be able to watch for what you're paying, so why would you do that?"

"It's fine if you want to show a piece of content to someone, but at the end of the day it's self-regulating."

"It's good also in new markets, so it's fine I guess in South Africa if you're at a coffee shop and you're telling your friend about these great documentaries that you've seen, or these amazing movies and go 'Oh, it's on Netflix, have a look, watch it'. And maybe they think I should get it as well. So it's kind of good because it's free advertising."

"We don't really have a strong stance against it, it's self-regulating by itself at the same time. And as long as it remains within a family, it's more or less okay."

"Also its more often teenagers. But when they first start working and get their first income, they often go 'I want my own account' and can afford it."

Netfix coins a new term as the video streaming giant continues to analyse binge viewing behaviour: 'binge racing'.

Netflix has coined yet another new term as the video streaming giant continues to analyse and refine viewing behaviour in the binge-watching era: "Binge racing" - a new type of TV viewer and TV show fan who race to be first to finish shows as part of a new "TV watching status symbol".

Netflix says more than 8 million viewers worldwide now "binge race" their favourite series and especially do it with seasons of shows like Stranger Things, Fuller House and House of Cards.

Netflix says the fast-growing TV viewing culture of binge-watching - watching a lot of episodes of a particular series in succession, has now also led to "binge racing": viewers who accomplish in a day what takes others weeks to achieve.

So-called Binge Racers - Netflix's new term for these kinds of viewers - strive to be first to finish a show by speeding through an entire season of a show within 24 hours of its release on a subscription video-on-demand service.

Netflix says binge racers are defined as viewers who completed a season of a TV show within 24 hours of its release on Netflix.

So far 8.4 million Netflix viewers have globally engaged in binge racing and the new phenomena will likely also hold true for rivals in South Africa and Africa like Naspers' Showmax, Amazon Prime Video, ONTAPtv, DEOD and others.

"The rate of this binge racing behaviour continues to grow," says Netflix. "Between 2013 and 2016 the amount of launch day finishers increased more than 20 times over."

Netflix says binge racers are not just couch potatoes. "For these super fans, the speed of watching in an achievement to be proud of and brag about. TV is their passion and binge racing is their sport".

"There's a unique satisfaction that comes from being the first to finish a story - whether it's the final page of a book or the last, climactic moments of your favorite TV show," says Brian Wright, Netflix vice president for original series.

Gilmore Girls: A Year in the Life garnered the most global racers in its 24 hour debut on Netflix.

Fuller House reigns supreme in Ecuador, Club de Cuervos scored the number one slot in Mexico, and Marvel’s The Defenders takes the cake (er, The Hand) in Korea.

While binge racers are watching fast in pursuit of glory across the globe, Canada clocks in with the highest percentage of 24 hour finishers. South Africa and African countries don't yet feature anywhere on the top list.

Netflix top 20 binge racing countries are:

1.Canada
2.United States
3.Denmark
4.Finland
5.Norway
6.Germany
7.Mexico
8.Australia
9.Sweden
10.Brazil
11.Ireland
12.United Kingdom
13.France
14.New Zealand
15.Peru
16.Netherlands
17.Chile
18.Portugal
19.Italy
20.United Arab Emirates (UAE)