When pay-TV service Kwesé announced it was bringing ESPN back into living rooms in Africa two years ago, South African media giant Naspers sat up and took notice. After all, it was Naspers that used to carry the sports network in Africa, on its market-leading DStv pay platform, before ESPN executives decided in 2013 to shutter their TV operations on the continent (as well as in some other international territories) and focus on digital content and syndication instead.
Kwesé didn’t stop with ESPN. The ambitious new multiplatform network also inked deals with the likes of AMC, Discovery and Vice. By the time it began rolling out its pay-TV offerings across Africa last year, the company had signaled its intent to challenge the dominance of DStv.
“It is time for an alternative player on the continent that offers premium content, geared toward the family, at an affordable price,” says Joseph Hundah, CEO of Econet Media, which owns Kwesé.
The pay-TV upstart is one of the latest players to join the fray in Africa, a market of a billion-plus people that remains largely untapped. Whereas paybox services are struggling to hold on to customers in developed nations and regions such as the U.S. and Europe, subscriber numbers in Africa continue to climb. According to data from London-based Digital TV Research, Africa’s pay-TV subscriber base topped 23 million in 2017 — a number forecast to rise 74%, to nearly 41 million, by 2023.
“Africa really lags behind in terms of the level of pay-TV penetration into the household,” Hundah says.
Naspers’ DStv still enjoys more than 50% market share across the continent. But its stranglehold has been loosened by the arrival of multiple competitors and by the continued disruption of SVOD platforms. “The power has now shifted,” says Russell Southwood of telecom, internet and broadcast consultancy firm Balancing Act.
DStv’s rivals include not only Kwesé but regional services such as East Africa’s Zuku and Azam, and China’s StarTimes, which began rapidly expanding across Africa a decade ago. StarTimes has aggressively pushed into underserved territories and eclipsed DStv’s subscriber base in fast-growing markets like Nigeria. Alongside other emerging players, it’s attracted mass-market consumers by undercutting DStv’s high-end pricing, which has forced DStv to slash subscription fees.
“The price at the bottom end has come down,” says Southwood. But while that allows pay-TV providers to shore up their subscriber base in the short term, it might lead to a financial reckoning down the line.
It’s already been a turbulent time for Naspers, which tried to spin off its pay-TV business outside South Africa last year, citing “muted economic growth across sub-Saharan Africa [that] has resulted in the toughest operating conditions in over two decades for the video-entertainment business.” Bloomberg noted in 2017 that, apart from its profitable stake in China’s Tencent Holdings, “Naspers has been bleeding cash in its core operations for two straight years.” Rival players smell blood in the water.
But the bullish forecasts for continued pay-TV growth also mask the increased threat posed by SVOD and OTT services. Across Africa, data costs are decreasing, while mobile connectivity and fiber uptake are on the rise. “Once you’ve got that kind of connection, you’ve got some very different choices,” Southwood says.
Which pay-TV players rise to the top and then ride out the gathering storm could ultimately come down to which are able to adapt to a changing market. Kwesé’s Hundah is preparing for the challenges ahead. “We are gearing ourselves up to be a mobile-centric product,” says Hundah. “We’re not focusing just on satellite pay television and hoping that that is what’s going to bring us success.”