VIDEO ON DEMAND
Kwesé lifts competition with Telkom
VOD has become the new value-added service that telecoms operators are venturing into to get customers on their high-speed network
Competition in the video-on-demand (VOD) market is set to intensify after the launch of Kwesé’s video-streaming platform, with analysts describing it as a game changer.
This development took place as Telkom also launched its Telkom LIT Video platform.
VOD has become the new value-added service that telecoms operators are venturing into to get customers on their high-speed network. The service is also disrupting the traditional TV market.
In September, Kwesé, owned by Econet Group, launched its decoder, pre-installed with some of its content and also Netflix. The launch follows Telkom’s announcement of its LIT Video and LIT music-streaming services.
Telkom and Kwesé seem to be using Netflix as a hook to lure customers. In addition, Telkom has added Naspers ShowMax, Google Play and DStv Online, while Kwesé carries a range of its sports channels and other content including news and lifestyle channels.
But Telkom is differentiating itself by not charging any data when customers stream videos as long as they buy data bundles of 5GB and more.
Kwesé’s Roku box is a 'dramatic differentiator' as it facilitates access to a wide range of streaming video options
George Kalebaila, research director for telecommunications, media and internet of things at International Data Corporation, says Kwesé is a full digital media outfit and its content is more diverse.
"The offering is more geographically dispersed across several countries and it is a full package. This means that they are direct competition to MultiChoice. Telkom’s strategy is to own the network and, hopefully, through the added-value services, reduce churn."
Kwesé’s other big advantages include having flexible options and not locking subscribers into lengthy contracts. Kwesé has teamed up with sister company Neotel to add its VOD to the telecoms operator’s packages.
But having Netflix on each platform is not enough. Service providers will still have to make it easier for consumers to subscribe and provide more local content. Both Telkom and Kwesé could pre-instal any number of apps and services, but the magic lies in the ease of use of the device and the extent to which it has been adapted for the domestic market.
World Wide Worx MD Arthur Goldstuck says each VOD player is finding its niche. Showmax is aggregating and producing local content, and digital entertainment on demand has a strong focus on extreme sports and school sports.
Kwesé’s Roku box is a "dramatic differentiator" as it facilitates access to a wide range of streaming video options. Live news services, in particular, distinguish it from other local VOD services, Goldstuck says. Kwesé’s box is made by US-based Roku.
Deepti Dhinakaran, ICT research analyst at Frost & Sullivan, says what is most needed is affordable pricing of these boxes, which should be preloaded with content. In the case of Kwesé, users will have to spend R1,600 for the box.
This pricing is "steep", despite the fact that users are given free access to Netflix for three months, Dhinakaran says.
This also means the set top box is merely an aggregation of streaming services that users would still have to subscribe to after the Netflix free trial period.
While users get access to some perennially free channels, they will still need to subscribe separately to each of the services like Netflix and NBA League Pass, which makes the overall cost of Kwesé’s video streaming service less affordable, says Dhinakaran.
Telkom’s box comes with a one-off price tag of R1,099.
Another important factor behind the high prices of these VOD services is the internet access cost, which makes it appear as if these services are meant only for high-income groups, says Dhinakaran.
Data prices are still high and some areas still do not have a high-speed internet network.
Research ICT Africa says that despite Telkom’s lower data price, customers are not subscribing to the product in large numbers.
Network quality, coverage, loyalty and transactional costs, which are the main switching costs in mobile telecommunications, could be some of the reasons for that.
Dhinakaran says companies looking to enter the VOD market can differentiate themselves by offering virtual reality and augmented reality powered games, entertainment, education and electronic commerce services along with video-streaming services in the same TV box.
Bundling of these services with attractive mobile data plans (with minimum 10Mbps speed for optimal viewing) would help these companies to grow their customer base more quickly.