by Inge Hansen (@mecnotabene) The dust is now settling, following the recent announcement from Netflix that its streaming content service has become available on South African shores. Launching locally, at the same time achieving near global expansion, the service has been welcomed with open arms and huge excitement on social media, with many fans claiming they would soon be unavailable at the prospect of binge-watching their favourite show.

This comes after years of South Africans drooling at the long lists of high-profile series that Netflix users across the globe could enjoy in high definition in their own time — and with the entire series being released in one go a large feather in the Netflix cap.

Consumers finding their own way

The long period of going without, however, has also led to consumers finding their own way to get their hands on the latest episode of Grey’s Anatomy. Those who prefer a more legitimate route have been using proxy apps, VPN etc to disguise the location of their devices to gain access to the service, for which they still pay a monthly fee. However, the period for which this will still be possible is sure to be short as Netflix announced in mid-January 2016 that the VPN access would soon be closed.

Alternatively, despite the potential ramifications, another option for the tech-savvy has been to obtain the latest content via illegal downloads. According to last year’s piracy survey by MyBroadband, 53% of the tech-savvy individuals and professionals they interviewed said they had downloaded copyrighted material within the past 12 months. At the top of the list for pirated content in the survey was TV shows, followed closely by movies — the same content that they would be paying a service fee for from Netflix or other over-the-top (OTT) content providers. The push towards a paid service for those who are already getting their hands on free content would therefore lie in the user experience and visual quality, which is a significant lure for anyone who has attempted to get through a movie that was recorded on a shaky cellphone in a movie theatre.

This viewing quality is more difficult for South Africans to achieve as, although a 0.5MB/s line is required in order for the Netflix service to be feasible, a 3MB/s line is required in order to receive SD quality, with HD quality (4MB/s) eating into your data costs even further. Although the fibre network is spreading locally, this is not happening at a blistering speed and is still mostly accessible to only the upper income tiers of our market. However, Netflix does have learnings from its launches in countries such as Brazil, where high internet penetration is also a challenge. After initial teething problems, Brazil is now one of its top 10 best performing markets, according to the Q3 2015 GlobalWebIndex survey, with 44% of internet users (16–64) using the Netflix within the past month.

Concern is understandable

Within the media industry, the next big question is “Will this affect my TV planning?” in terms of immediate uptake to the Netflix service, or similar OTT providers such as ShowMax. The concern is understandable, with the global giant boasting 69m subscribers worldwide at the end of 2014, and the only advertising available being for its own content. In addition, there is currently no measurement, so estimating any kind of viewership statistic is not possible.

Due to the various factors in play such as the bandwidth required, viewing hardware (ie smart TV, laptop, gaming console), a currently restricted content library, payment in the unpredictable dollar and the lack of dubbed entertainment, it’s unlikely that a mass movement from linear TV viewing will be seen. With DStv usage increasing on Compact packages and the experience offered by Catch Up (now offered on Compact), last week’s GOtv launch as part of the dual illumination migration process towards digital TV, as well as the lack of sports programming and live sport available with OTT options, an initial period of dual subscription is a more-likely scenario on a local level.

For the future of OTT, Netflix has shown that it is quick to adapt, and its new contract negotiations on a global scale will put it on the front foot for quality content in 2016, as it promises to expand upon the library that South Africans have access to. Its formula of creating shows that are less restricted, due to not being dictated by primetime viewing data and advertising, enables it to produce content that may be enjoyed by a wide demographic.

Advantage for ShowMax

In addition, local OTT provider ShowMax is also looking to expand its footprint by offering thousands of hours of KykNet content to South Africans all over the globe, as a step to make headway in other regions. An advantage for ShowMax going forward will be the large library of international and local content which is available to subscribers right now.

In terms of measurement, it will be some time before we can start to see the real impact of OTT and the subsequent launch of Netlfix, as our TAMS panel lags behind by approximately a year, according to our establishment survey. For the meantime, local is lekker, with the top programme spots for December 2015 being firmly held by our popular local dramas Uzalo, Generations, Muvhango and Skeem Saam, offering high reach for advertisers in a measureable environment.



Inge HansenFollowing two years at Media24 scrubbing for insights within the magazine division, Inge Hansen joined Nota Bene as an A&I analyst in March 2013. Working across multiple clients, including FMCG, alcohol and petroleum, she has the luxury of working with teams to develop robust insights that drive strategy while keeping abreast of media trends the world over. Inge loves having her pulse on the media landscape but far prefers raising her pulse mountain-biking on weekends. She contributes Thinking TV, a monthly analysis of South African TV viewership figures, to MarkLives. Follow @mecnotabene for regular media updates.

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