DTH in Africa is a hot topic this year with Multichoice’s pre-eminence in the region likely to come under threat from Gateway Broadcast Services, which is looking to tap into the demand for affordable pay-TV across the region. Gateway Broadcast Services, a subsidiary of Gateway Telecommunications has launched a new pan-African pay-TV service, GTV, as it aims to put the heat on Multichoice, the leading DTH provider In the region.

Gateway is targeting a market of close to 50 million TV households In sub-Saharan Africa, many of which don’t pay for a television service. The operator hopes to get around 100,000 subscribers in the first 12-18 months. The pay-TV service was initially launched In Nairobi, Kenya on June 20 and subsequently In Tanzania two days later.

So, will MultiChoice Africa be able to keep the new pretender at bay? In an exclusive interview, the CEO of MultiChoice Africa Eben Greyling talks about the developing market for DTH in the region outside of south Africa, as well as the impact he sees Gateway having in the region.

Satellite News: How many subscribers do you have in Africa? How do you view the potential for subscriber growth over the next two years? Which markets do you see having strong potential for growth in Africa?

Greyling: MultiChoice Africa has more than 450 000 subscribers. This figure excludes South Africa, which is served by our sister company MultiChoice South Africa. We think that in the next two years subscriber growth will be driven by economic development in the various African countries.  Around the world, the main driver for growth in the pay-TV market is spearheaded by increases in GDP per capita. If you use South Africa as an example, for quite a few years subscriber growth flattened out. Then in the last 3-4 years, as the South African economy started to do well, with a corresponding increase in middle-income earners with more disposable income, the pay-TV market started to grow again. In terms of specific countries with strong growth potential, we see most of the markets that we operate in doing well over the last 2-3 years and we this trend will continue in the future.
 

Satellite News: In recent weeks, we have seen Gateway Communications enter the market and try and offer a low cost DTH option to customers in Africa. What kind of impact will their market entrance have on MultiChoice? Will you need a lower cost pricing strategy in order to compete?

Greyling: MultiChoice’s strategy is to offer premium content and choice. We have a lot of exclusive content that ensures our consumers are getting a world class product. Still, we offer choice and we have a range of packages available to our customers, from our premium top of the range package to our family package, which I believe will remain competitive even after the entry of the new player. However, we are not looking to compete only at the lower end of the market or even to engage in a price war. We will continue to offer a world class service premised on quality in content and choice.

Satellite News: What do you see as your potential advantages over Gateway in the pay-TV market? Is their entrance good news for the market?

Greyling: We hope that it will be good news for the market and that consumers will benefit from a variety of services on offer. From our view, this new entrance will hopefully see more investment in local content and contribute to the diversification of the economies and the growth of the local production industries.

GTV has some good plans in place but we don’t see a significant impact on our business because we believe we offer a different service. Our offer is about premium content and variety. Within that, we try to offer different bouquets with different pricing options but we do not compromise on choice and premium content.  We have got some of the best movies and sports channels available anywhere in the world and we have exclusivity in all our markets in terms of screening most of that content first.  We have an uncontested breadth of sports options. We have got 11 sports channels at the moment. So, I think it’ll be difficult for GTV to compete with DStv in terms of the of premium sport & movie coverage that we offer. We believe the GTV offering will not compete directly with the DStv premium package and will therefore offer consumers an alternative in terms of a basic pay-TV package.

Their entrance should be good for the market because they offer something different. However, generally when a new player enters the market, not just here but in most parts of the world, the cost of content goes up because operators are all bidding for the same content. That can drive subscriber prices up, in order for operators to maintain profit margins. Also, if  operators don’t have the financial backing to operate in a competitive environment, you see them go under or some market consolidation – as was the case in Europe in the 1990’s.

Satellite News: In Europe, IPTV is a very hot topic. We have seen BSkyB acquire Easynet, and many satellite pay-TV operators do deals with telcos to have their channels distributed via IP? What are the opportunities for MultiChoice to have its services delivered on platforms other than traditional DTH? Will telcos in Africa look at IPTV?

Greyling: I think IPTV in Africa as a delivery mechanism is at least a couple of years away. Long-term video over WiMAX could work as the technology develops. In the short-term, the infrastructure is not there for IPTV to take-off in Africa. We keep a close watch on it, especially as it is offers a return path and can do well for certain products if you have good broadband speeds. A VOD service can work well on this platform. One day, I can see these services coming to Africa, but don’t see it happening in the short-term. A lot of other things need to happen before that will take-off. However, when it takes off, it will move quickly.

Satellite News: Equally, we have seen deals with mobile operators (BSkyB/Vodafone, CanalSat/SFR). How would you describe the mobile television opportunity for MultiChoice? I believe you are involved in a DVB-H trial in South Africa. How will you go on from there?

Greyling: We will definitely rollout mobile TV in a couple of countries in Africa this year. We will partner with mobile operators for that service. We are a long-way down the road in terms of negotiations for these types of partnerships. So, it is definitely something we are looking to rollout later this year. In the next 12 months, we will probably try to do at least 4-5 countries, and then the rest of Africa in the next 4-5 years. I think it will do very well in Africa. There is not one specific technology, which will be the de-facto standard. However, we will roll-out the DVB-H technology in Africa. There are a lot of challenges, but we think it is a big opportunity for us in Africa and we are well positioned to offer this service to consumers in Africa.

Satellite News: Could you tell us about your Set-Top Box (STB) strategy? Are you planning on bringing higher capacity PVRs to the market this year? What about HD PVRs? What progress do you hope to make in the PVR and HD markets this year?

Greyling: We have got a PVR in Africa, which we launched in sub-Saharan Africa in the last year. It is one of those products, which is quite expensive but we can see it growing steadily each month. We have set some steep targets this year in terms of PVR sales. It is a product that sells well in terms of word of mouth. It is a difficult concept to market so word of mouth is important. It is a very sticky application, so once people subscribe to the PVR services, they are unlikely to churn. We are currently in negotiations as for the development of a HD PVR. We will look to launch it in the second quarter next year, and hopefully in time for the Olympics. We will launch HD across the board in Africa.

MultiChoice Africa operates from four satellites over Africa, this includes the C-Band IS 10 satellite which covers the whole of Africa, the KU Band Eutelsat W4 satellite which goes from Senegal in the West to Mauritius in the East, SESAT over central Africa and the KU Band IS 7 satellite which covers Southern Africa.  Hence the W4 markets are Senegal, Guinea, Sierra Leone, Liberia, Cote d’Ivoire, Ghana Burkina Faso, Mali, Togo, Benin, Nigeria, Niger, Cameroon, Equatorial Guinea, Gabon, Congo, CAF, DRC, Uganda, Kenya, Tanzania, Rwanda, Angola, Mozambique, Madagascar and Mauritius.

Satellite News: What are the major content challenges this year? Finally, how do you see the digital television landscape changing in Africa over the next 12 months?

Greyling: The biggest challenge is the increase in the costs of the content that we acquire. In terms of Africa, we have rolled out a lot of our own African channels, through our sister companies M-Net & SuperSport. We want to continue to make these channels more relevant to the local market, which is difficult, if you offer a pan-continental service. We do however believe it is important to grow the African content on our service in order to grow our subscriber base.

In 12 months time, we would hope to achieve 20 percent growth in our markets. We always try and grow between 10 and 20 percent. We have a few more channels lined-up for launch. At the moment, we are the number one provider of pay-TV in Africa and I have got no reason to think we won’t be the number one provider for the next ten years. We will do whatever is necessary to be number one and stay number one.