Is Netflix entry into Africa a threat to Cinema, pay TV?

The boards of Pay TV and Cinema firms in Nigeria are likely holding crucial discussion on possible threats of the formal entry of Netflix in to Africa. Netflix which operates in over 50 countries is an American international subscription-based internet streaming media service provider.

The multinational company established in 1997 and which started its subscription-based service in 1999 provides video content to consumers on demand through the internet.  Its foothold in to Africa considered as big market is at a time the continent is experiencing growing middle class with more consumers demanding specified viewing content.

Analysts fear that the entry of Netflix will further boost the video on demand option, a trend likely to pose a threat to pay TV and Cinemas. This is as African consumers increasingly adopt Western tastes and buying habits, especially when it comes to technology. The continent is also witnessing significant increase in online shopping in certain economies such as Nigeria, Kenya, Morocco, South Africa, Uganda, and lately Tanzania, according to Africajumpstart website, a trend which will reflect on video on demand.

But Abimbola Onagbade, brand and communication manager, African Cable Television, one of the operators in Nigeria’s thriving Pay TV market allayed the fears saying that the Netflix entry is not something the pay TV should be worried about. Netflix is for a different genre, interested in those who are for particular kind of content. The pay TV is also gradually moving into the online market, he said.

As a direct competition to kind of Netflix service, he said some pay TV operators already have systems that will enable consumers to select  particular channels they want for a small amount of fee. “The pay TV is getting much more innovative with services”, he said

According to Abimbola, Netflix service is a direct competition to Cinemas rather than pay TV. “Their coming may affect the cinemas more than pay TV.  Consumers may not like to pay so huge to go to the cinema to watch particular films while they can sit in the comfort of their home to assess similar content on demand”. The operators in pay TV are not seeing it as a major competition, he reiterated.

Abimbola agrees that African market for Netflix is huge.  “The market is there and it is huge” as Netflix affords the consumer the flexibility of getting the particular content rather than paying for all channels which the consumer may not need.

He however said since Netflix is data oriented network and may be challenged by data cost and broadband infrastructure challenges. Also it requires smart TV to assess video on demand services.

The Capital.ng, online news says in its report last month that “One challenge that has hindered the growth of online streaming in Africa is cost and quality of data. But the issue of quality is being addressed already with the advent of LTE internet service providers offering speed of up to 32mps. Cost is also going down in some parts of the continent and this is expected to continue with increasing demand”.

The report predicts that “with lower data cost and changing consumer behaviour driving up demand for on-demand TV” pay television service providers will struggle. The reports further said the saving grace for some pay TV channels will be special offerings.

For instance, the report said DStv will retain its forte. This is as  the South African pay TV service holds the rights to air English Premier League among other channels and  sports on the continent for years to come, the arrival of Netflix and increased adoption of other VoDs on the continent may not affect DSTV, Thecapital report said.

Iroko TV, one of Africa’s first and the largest mainstream online movie streaming websites launched in December 2011 also operates similar model with Netflix. Presentlhy it has access to over 5,000 Nollywood film streamed on-demand.