Netflix has become a huge part of the popular culture. From being mentioned in songs to well…er, Netflix and Chill. Netflix launched in 1997 offering online movie rentals. It changed its business model in 1999 where and started offering unlimited rentals for one low monthly subscription. In 2007, Netflix introduced streaming allowing users to watch television shows and movies on their personal computers. The service expanded to allow streaming on other devices such as Xbox 360, Blu-ray disc players, set-top boxes and now on Android and iOS. Netflix begun producing its own original content which has given us Orange is the New Black, Narcos and House of Cards among other shows.
In 2014, Netflix announced to its investors its intent to roll out globally in over 200 countries by end of 2016. The was followed by launches in Europe, Asia and in 2015, an announcement was made that Netflix will be launching in the African market in South Africa specifically. Reports have it that the launch will take place in January. In 2015, the African market attracted top tech startups and companies including Facebook which launched an office targeting the African market. Car hailing startup Uber also launched in Kenya in early march as did AirBnB. The two startups have managed to receive a boost of confidence by attracting users in a market that perennially seen as lagging behind in terms of technology adoption. In addition, it demystified the myth that the African continent is not tech savvy. If Netflix kills it in Mzansi, it will likely launch in other markets in Africa.
Will Netflix Kill it?
If the buzz online by South Africans is anything to go by, South Africans will subscribe en mass. However, I am not quite sure if the Buzz will last post launch. First is Bandwidth. Netflix is a data-gobbling service. Fiber Optic outlay in the continent is still low, especially to residential areas. While there is proper wireless connectivity in 3G and 4G, it is expensive. Based on online reports, 1 GB of data will stream for say two hours, which is enough for one to watch a movie. With most users in Kenya surviving on say 1GB a month, this is bound to be expensive for the average user. At the moment, Netflix does not allow one to cache content, meaning if you have a bad internet connection or are wary of your internet usage, this may not be the proper service for you. In addition, Africa’s internet usage is still at the rudimentary level. Users largely use their internet for communication via Over-the-top services such as Whatsapp and for social media and yet to migrate to the next gen user who uses the internet for shopping and streaming.
Content! They say content is King. The success of Nasper’s owned DSTV has been having a diverse content catalog focused on the African continent. I am talking football on SuperSport, Africa Magic channels as well as local channels available on this platform. African content sells in the African continent. In the markers where Netflix has launched, users were first able to view the local content and they can browse to find everything else they so wish. Still, I am not sure Netflix has enough of this content in its catalog to allow users to pay for it. In addition, the African market is unique in that now more than ever consumer influence on content has increased. Users in markets like Kenya want programs they feel speak for them and represent their identity, a trend picking in the African market. They want to watch Local News, Sports in addition to catching up with their favorite shows on Netflix
Competition is probably the most unmentioned hurdle for Netflix in the African market. From Pay TV service providers to the launch of other streaming services in the African continent. Naspers, the owners of Olx, Multichoice and Supersport recently launched their service in the African market. The service, ShowMaxx is also a streaming service that allows users to cache content especially in low bandwidth environment. In addition, popular TV shows such as Suits, Game of Thrones and Big Bang Theory are included in its catalog. Perhaps the most important has been snapping up of local content for the service. DSTV has also cut a niche for itself in the African market as the most eminent of pay TV services. In addition to a wide footprint in the African market, it offers users content they want to watch and is delivered via satellite which makes it a cheaper option in areas without internet connectivity.
Where can it kill it?
Mobile! African is big on mobile. Even bigger on smartphones, as users increasingly move away from feature phones. Netflix already has a mobile phone app available on both Android and iOS, which makes a better entry point in the African market. Of course users would love to have the ability to cache content and then watch it later rather than stream it on their mobile devices owing to bandwidth shortcomings.
Content. Netflix has thrived owing to the quality of content the service offers from its catalog. If you access Netflix via VPN like I do, you will marvel at how good the quality of videos is. In addition, to the quality of the content, Netflix is likely to replicate the same model applied in other markers where it offers local content first when a user logs onto the service. This mix of local and international content is likely to present a winning combination in this market. It has worked for DSTV albeit in the TV space.
Set-top Boxes! Netflix is compatible with dozens of set top boxes in other markets and that is a model that would be the most successful in this market. irokoTV, Africa’s first streaming service from Nigeria signed deals with Pay TV service provider StarTimes that allowed its subscribers to enjoy the vast catalog of African content owned by iRoko. In the African market, Netflix may opt to partner with say Zuku. It owns a pay TV service and its users own Set-top boxes. In turn, Netflix would set up a movie Kiosk within Zuku (Like DSTV did with Explora), thus allowing users to buy these movies for the monthly subscription or on-demand. As a user, I will not purchase Pirated content while, there is the option to watch this high quality content, cheaply and from the comfort of my house.
I hope Netflix launches here soon!
[UPDATE] It did launch sooner than expected.