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  SVoD, Mobile Telephony , OTT

  Vodacom, Showmax, Telkom

Zero-rating will be pivotal for SVoD services in mobile-first markets

The over-the-top (OTT) sector in sub-Saharan Africa has seen a significant growth over the past 2 years. In 2015, media group Naspers launched subscription-video-on-demand (SVoD) service Showmax, shortly followed by Netflix, Amazon and Afrostream in 2016. Malaysia’s Iflix is in the process of expanding its presence to sub Saharan Africa (SSA), and telco Vodacom has unveiled its own plans to launch an SVoD service in the next few months. Expanding OTT into sub-Saharan Africa may seem slightly counter-intuitive, as the region has one of the lowest fixed broadband penetration rates in the world – just 2.7% of households in 2016. However, that does not mean that internet is not available.  In the same time period, mobile penetration (as a % of population) reached 92%. In key markets such as South Africa, Kenya, Nigeria and Ghana, more than half of mobile subscribers used mobile data services for internet access.



Many SVoD services already rely on mobile providers for billing purposes – essential in a market with low credit/debit card penetration – but adopting a strategy that extends beyond a basic billing relationship is just as crucial for SVoD providers in SSA. Showmax has partnered with Vodacom to offer a mobile version of its service optimised specifically for smartphones and tablets, resulting in lesser data consumption – an important step given that the price of data required to use a video service can exceed the price of the video service. Furthermore, in March, Showmax introduced promotional data allowances to its Kenyan and South African subscribers that take its service through Vodacom; an additional 1GB/month for 3 months. In South Africa, Showmax has also partnered with Telkom, effectively offering zero-rating by providing an additional 10GB of data to LTE users to be used exclusively for Showmax.

In markets lacking extensive fixed broadband infrastructure, zero-rating partnerships with mobile operators will be the fastest, and possibly only, way for SVoD services to grow. We expect to see more such deals emerging over the next few years.