Can Online Streaming Replace Traditional TV in South Africa?

Staff Writer / 23-08-2019 / News

The high cost of pay-TV and the decrease in the cost of bandwidth has led to more South Africans migrating to on-demand streaming video services such as Netflix for entertainment, but can online streaming ever replace traditional TV in South Africa?

Multichoice, which runs pay-TV service DStv, claims it has a subscriber base of 7.2 million in 2019, with a year-on-year increase reported every year. However, in May 2018, DStv also claimed that it had lost over 100 000 premium subscribers since 2015. This year, the company has decided to freeze the price of its premium package at R809 per month.

Netflix vs. Showmax

In 2015, Naspers, which owns Multichoice, launched their Showmax video streaming service to counter the entry of US content giant Netflix. Although Showmax is free to Multichoice subscribers and offered as a standalone service to non-subscribers, South Africans flocked to Netflix upon launch. Although Netflix does not report the number of subscribers it has in South Africa, Multichoice estimated that they had gained almost 600 000 streaming subscribers in 2019.

Stumbling block of internet access

When streaming services first launched in the country, the biggest hurdle was the cost of data. However, with the #DataMustFall movement, the call for lower data prices was heeded by local telecommunications operators.

Vodacom claims to have dropped the cost in the last 3 years by 40%, while MTN says it has dropped the cost of data since 2011 by 87%. Cell C says it has reduced the cost of data by over 28% in 2018. In 2016, Telkom made one the biggest shifts to contribute to the falling cost of data in SA with the introduction of FreeMe bundles, coupling 1 to 20GB data packages with free calls, instant messaging data and recently added zero-rated data for on-demand streaming of Netflix, Showmax and YouTube to the service through Telkom LIT.

Current network trends show that costs will fall further or at least packages will be offered with zero-rated data for streaming from certain providers, as is the case with the Telkom LIT bundles. ICASA’s End User and Subscriber Service Charter regulations came into effect in March this year, requiring networks to offer rollover data and extend validity periods, so its good news for consumers.

Future of TV in South Africa

According to PwC’s annual Global Entertainment & Media Outlook 2018 –2022 , Over-The-Top (OTT) video and music streaming services, as well as artificial intelligence, smart home services and virtual assistants will bolster internet usage around the world. The report finds that the fastest growth will be seen in virtual reality and OTT content from services like Showmax and Netflix. It won’t be long before the same trends filter to SA.

With the evidence of the growth of streaming services in the country, more and more South Africans may start to ditch traditional TV for streaming platforms or at the very least use these platforms to give them more choice over and above pay-TV options.

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