Sub-Saharan African economies like Kenya, Nigeria and South Africa, have seen an increase in penetration of smartphones and internet access. This development might be what prompted Netflix, the popular American multinational subscription-based internet streaming media service provider to launch in all 54 African countries.
The American giant which has established itself as a global leader for years, spending heavily on producing original shows like the infamous Games of Thrones was however not coming into an empty market as South African subscription movie and TV show streaming service ShowMax has been on the game since 2015.
When Netflix launched in Africa, many wondered how the South African ShowMax, owned by Africa’s largest media and tech corporation, Naspers would contest with the American giant. Many saw Netflix winning but ShowMax and other local operators refused to let that win come so easy.
Throwing itself at the field, ShowMax expanded their African market video streaming services to 36 countries along with the introduction of Econet-owned satellite TV service Kwesé TV which provides local content. Other releases in the market was MTN's FrontRow and Vodacom Group Ltd.'s Video Play.
And while Netflix has developed video streaming compression technology which allows it to deliver shows, movies, and documentaries even over slow connections, penetration rates in the African market are still relatively low and the price of internet data is still a luxury for many.
Been familiar with this predicament, Naspers ShowMax decided on a different approach to help set them apart from market contenders. They adopted a hyperlocalisation strategy which has been deployed in South Africa, Kenya and recently Poland which is among the 66 countries the company operates.
Tackling the Data Challenge
The adoption of internet TV across Africa has been a great challenge. Various media houses in Kenya took months off broadcasting before migrating from analogue to digital. And despite what seem like a success, high cost of internet access and poor internet quality remain some of the main challenges for the digital migration campaign.
With data still a luxury, many tend to watch uploaded shows online many hours or days after it has been broadcasted. This is a disadvantage to Netflix whose sole purpose was for locals to watch shows and programs as they run in Hollywood.
ShowMax however is dealing with this huge problem by introducing a bandwidth capping tool to help users manage their data consumption by controlling their video quality. ShowMax also allows downloads, so subscribers can watch offline.
Using Local Currency to Pay for the Services
According to the ShowMax, they noticed a gap in the market for paid-for video streaming. By localizing pricing and payment options where they allow local currencies to be used to pay for their services, ShowMax not only addressed specific gaps in the market but also had an upper hand than Netflix whose services are paid in US-dollars and therefore a subject to exchange rate fluctuations.
In Kenya, subscribers have it all easy as they can pay for their GOtv or DSTV using their mobile money platforms like MPesa while South Africans can pay with their Vodacom airtime or prepaid vouchers available at 500 different retailers all over the country.
To add cream to the sugar, subscribers can choose to add their ShowMax fee to their Telkom landline phone bill or their Vodacom mobile phone bill, as well as their MultiChoice DSTv account, the satellite television service also owned by Naspers.
Providing Local Content
In Africa, there is a rising need for original content aimed at African voices. This is what Netflix’s can’t compete with as its main strategy is to provide popular and original Hollywood shows to its customers in Africa and abroad. In Kenya, there was a heated debate by The Kenya Film Classification Board (KFCB), the body responsible for regulating visual media. The body argued that Netflix content was inappropriate by Kenyan standards and called for its censoring and blocking.
And while Netflix is stuck with their Hollywood content in the highly demanding African market, ShowMax is taking advantage by providing local content. Its content is custom-made to suit viewers in a specific market.
The company states that for example, Kenya Riverwood content, which is mainly in Swahili and other local Kenyan languages, won’t be broadcasted in South Africa because Kenya and South Africa are two different countries with different cultures, traditions and perceptions.
Instead of providing Hollywood’s Real Housewives of Atlanta, ShowMax provides The Real Househelps of Kawangware for the local Kenyans.
While at least internet TV is the future, traditional pay-TV is still popular in Africa, and it’s dominated by Naspers' subsidiary Multichoice, which has millions African subscribers from both DsTV and Gotv services. Meaning Netflix won’t have it so easy.