pace_pace 30/10/2013 10:02 Page 1
Great TV is the same
the world over!
frica’s rich and diverse
continent brings
opportunities accompanied
by a wide range of challenges
to the pay-TV industry. Arguably, two
of the greatest challenges are i)
delivering TV across wildly contrasting
market needs and ii) do so cost
effectively across large and diverse
geographical areas.
Let’s look at the ‘top end’ of the
African market; here the
average revenue per user
(ARPU) is similar to other
established regions around the
world with premium content,
HD PVRs, even OTT and
multiscreen being available.
Realistically though, the greatest growth
is to come from pay-TV viewers subscribing to
a service for the first time. For this segment,
pay-TV subscriptions represent a significant
proportion of their monthly salaries, and
therefore they don’t want to be disappointed
–‘great’ TV fundamentally needs compelling
content, an engaging experience and a high
quality of service.
Africa’s massive land mass with sparsely
A
available at the top end of the market, there is
significant market awareness and customer
pull for these services by the mass market. Any
start up pay-TV operator has the opportunity
to accelerate through these service evolution
gears rapidly. The key however is taking their
first pay-TV step, and if possible provisioning
for steps two and three.
Hypothetically, let’s consider two pay-TV
operators ‘Hare’ and ‘Tortoise’ who wish to
launch their first pay-TV service.
‘Hare’ launches a basic broadcast service
with a nominal STB
price of $24
with
subscriber
acquisition plus
broadcast delivery costs
of $24. At $2 per month fees, it
is two years before ‘Hare’ can make any
money. ‘Hare’ now wishes to drive subscriber
ARPU higher, but finds he needs to invest in a
But now it gets interesting – ‘Tortoise’ lets
his subscribers know that by using an external
USB flash drive or HDD (‘Tortoise’ may even
decide to sell his own branded drives) they can
now get live-pause, start-over and PVR for $2
per month, a year later and ‘Tortoise’ tells his
customers they can now access push-VOD
services with a wide selection of movies at $1
per rental.
Four years out, and ‘Tortoise’ now sees over
$5 ARPU per month net from many of his
subscribers, ‘Hare’ on the other hand is still
paying for his PVR STB and chasing his tail!
In the censored sequel, ‘Hare’ teams up
with his cousin ‘Fast Buck’, who persuades
‘Hare’ that instead of paying $24 for a STB,
they can get the cheapest
hardware, middleware and
conditional access system
(CAS) components and
shoe-horn them into a
lowest cost STB solution for
less than $20. Unfortunately,
we are unable to print this
horror tale of high integration
costs, late to market, poor hardware
and software quality leading to high
customer service costs and returns, the
ending is dramatic and harrowing with of
all ‘Hare’s’ customers churning to
‘Tortoise’s’ services.
There’s an interesting parallel with this tale
The Tortoise and the Hare
distributed hotspots of
population means wireless is
currently the most viable
delivery technology