Amazon will spend an estimated $4.5 billion this year on producing its own video content, while Facebook and Apple are each investing $1 billion along the same lines. Not to be left behind, Google is reportedly willing to pay $3 million per episode of a drama series.
These big investments will see a massive amount of video content flooding consumers, competing for their time and attention with the likes of Netflix and Showmax in South Africa.
So should local players be worried?
“No – not at all; if anything the opposite is true,” says Richard Boorman, head of communications for Showmax. “New entrants and anything that raises the profile of the internet TV segment is a good thing for us. One of our biggest challenges has been customer education – what is this internet TV thing? Why should I want it? How do I get it? We welcome anyone else entering the market and helping with that heavy lifting.”
Viewers consume multiple video channels
Just because more options are added for viewers doesn’t mean the slice of the pie is reduced for existing players. In Showmax’s experience, consumers happily subscribe to more than one video service at a time, as long as each service is giving them something different.
“Working in our favour is the trend of major studios (e.g. HBO, Disney) pulling their content from global internet TV services, which opens up an opportunity for us to house this international content, which is not available elsewhere,” says Boorman.
Aside from the previous advantage, local players have an edge over the tech giants because a lot of their content has been localised. Much of the programming that Google, Amazon, Facebook and Apple creates will be customised for and aimed at the US market, while Showmax and Netflix in South Africa are creating hyperlocal content.
Boorman comments, “Tali’s Wedding Diary is a great example – it was the most popular show ever on Showmax on its debut, but it’s full of jokes and caricatures that only South Africans would get. To give you an idea if it worked, Tali’s Wedding Diary had more than four times the number of views on its first day on Showmax than Game of Thrones season seven!”
More than just content
While much of the buzz has centred on the video content itself, there is much more to succeeding in a market than simply the content. “The single biggest thing holding back the adoption of internet TV in Africa is the cost of data,” says Boorman. Partnerships need to be done with local telecommunications players to ensure data problems do not hamper the viewer experience, while publicity and content marketing also needs to be a priority. “In the current era of ‘peak TV’ where there are way more shows out there than time available to watch them all, it’s up to internet TV services to earn time with their customers,” he adds.
The powerhouse of video streaming
There is no doubt that Netflix is a powerhouse of video streaming, recently surprising the market by adding 8.33 million more subscribers (in the fourth quarter of 2017) from around the world. That was two million more than the company had anticipated. Keeping ahead of the competition, the video streaming service invested $6 billion on content in 2017, expected to grow to upwards of $8 billion in 2018.
Netflix launched in South Africa in January 2016 and at the time, was accused of delivering a ‘basic’ catalogue. But it has now tripled in size, testament to the growth of the market. While Netflix says it can’t reveal regional subscriber numbers (the actual figure of subscribers in South Africa) it is happy with the growth it has seen in the country. Head of communications for EMEA, Yann Lafargue, said the numbers showed it was time to be more proactive in South Africa and that the service was now good enough to promote.
Lafargue said the company was proud to be in South Africa today. “In beginning, we try to be humble and learn what people like,” he said. “There is a strong appetite for streaming in South Africa. “It’s not like putting DVDs on shelves. We are trying to carry a wide range to suit a variety of people and profiles.” Netflix’s DNA, he said, is one of constant innovation.
And South African subscribers are now part of the global family tapping into the new way of consuming content. Which means Netflix is looking into tapping into our content too. Netflix is talking to local producers, but as too how far along negotiations are, well they’re playing their cards close to their chest.
The video space is at present a hot one. With so much investment from players being made and competition heating up in it, viewers can look forward to much more content and many more options.
Michael Bratt is a multimedia journalist at Wag the Dog, publishers of The Media Online and The Media. Follow him on Twitter @MichaelBratt8