BD Insider: Another casualty in Africa’s streaming market

Jesutofunmi Adedoyin -

🍔Quick Bite: Local telecom companies in Africa have struggled to sustain their streaming platforms, often losing out to global giants like Netflix and Amazon Prime Video.

Showmax, however, has emerged as a success story, capitalising on local content and strategic partnerships, but like Netflix, it now faces challenges in balancing pricing with profitability in a competitive market.

🧠 The Breakdown

The African streaming market has proved tough for local telecom companies to crack. Despite their vast customer bases and infrastructure, these platforms have consistently struggled to build and sustain momentum, especially with the presence of global giants like Netflix and Amazon Prime Video. Telecom-owned streaming services, while initially promising, have often faltered due to challenges in content strategy, user experience, and long-term market sustainability.

In recent years, the retreat of these services has become even more pronounced. The latest casualty in this trend is Airtel TV Services in Kenya, which officially discontinued its operations on September 30, 2024. This follows a pattern of similar exits, including Vodacom's Video Play, which shut down in 2022 despite holding a 17% market share. 

TelkomOne faced a similar fate, though it was eventually relaunched under new ownership as SABC+. The industry has witnessed several other notable exits, including Econet's Kwese TV in 2019, Cell C's Black (after an $80 million investment), and MTN's VU in 2017.

The failure of these platforms can be attributed to several fundamental issues. At the core lies an insufficient investment in content strategy, with many platforms struggling to secure and curate quality programming that resonates with African audiences. 

Financial challenges have played a crucial role, particularly in terms of foreign exchange constraints affecting content acquisition and the high operational costs associated with maintaining streaming services. Former Cell C CEO Douglas Craigie Stevenson's admission that it was "crazy" to think Black could compete with Netflix reveals the magnitude of the challenge these telco-owned platforms faced.

IROKOtv, once the pioneer streaming service for Nigerian films, has also faced significant challenges. By the end of 2022, its active user base had dropped to 46,000, a steep 76% decline from the beginning of the year. While Digital TV Research had predicted 600,000 subscribers by 2025, the platform’s current performance and growing competition make that target seem increasingly out of reach.

The impact of international streaming giants

Netflix's entry into the African market in 2016 marked a turning point in the region's streaming space. By November 2023, Netflix had accumulated 1.8 million subscribers and secured a 33.5% market share, demonstrating the power of its global content library and strategic investment in local productions. However, not all international players have found similar success. 

Amazon Prime Video, with approximately 300,000 subscribers, has struggled to gain significant traction in the market. The company's recent decision to downsize its African operations and halt the commissioning of original content signals the challenges even global giants face in penetrating the African market effectively.

Showmax: The rise of an African streaming champion

In the midst of these market dynamics, Showmax has emerged as a remarkable success story. The South African-based streaming service has successfully displaced Netflix to become Africa's most popular platform, boasting 2.1 million subscribers and commanding a 39% market share as of November 2023. This achievement is particularly noteworthy given the platform's relatively young age, having been spun out of MultiChoice in 2015.

Showmax's success can be attributed to its deep understanding of local preferences and strategic approach to content curation. The platform has effectively combined high-quality international content through partnerships with HBO and Comcast with strong investment in local productions. The acquisition of exclusive rights to premium sports content, including the English Premier League, has further strengthened its market position.

Strategic partnerships and market position

The platform's partnership with Comcast, which acquired a 30% stake through NBCUniversal in March 2023, has provided Showmax with access to advanced technology and additional funding to compete in the market. This collaboration has also opened doors to an expanded content library, including titles from major studios such as BBC, Lionsgate, ITV, Paramount, Sony, and Warner Bros.

A significant advantage for Showmax lies in its relationship with parent company MultiChoice, which operates the successful DStv satellite television service. This connection provides Showmax with extensive distribution networks, established relationships with content creators, and deep market intelligence across African territories. MultiChoice's commitment to the platform is evidenced by its recent $89 million investment and its rejection of an acquisition bid from French media giant Canal+.

When comparing subscription fees between Showmax and Netflix across key African markets, the price difference is likely playing a significant role in Showmax’s rise to popularity.

In Nigeria, Showmax’s plans range from ₦1,600 to ₦5,400 monthly, approximately $1 to $3. In contrast, Netflix’s monthly subscription fees range from ₦2,200 to ₦7,000 (around $2 to $4). Showmax's lower pricing is more affordable, especially for price-sensitive users.

In South Africa, Showmax offers monthly subscriptions priced between R45 and R140, roughly $2.55 to $7. On the other hand, Netflix charges between R99 and R199, or about $5 to $11. Again, Showmax is a cheaper alternative, with more accessible entry-level plans.

In Kenya, Showmax’s monthly prices range from KES 300 to KES 1,000, which translates to $2 to $7. Netflix’s prices range from KES 200 to KES 1,100 (about $1.55 to $8.51). Though prices are similar in Kenya, Showmax’s additional value with local content and sports offerings makes it competitive at the same price point.

The lower subscription fees, combined with Showmax’s investment in local African content and its strategic partnerships, make it more attractive to viewers, helping it edge out Netflix in certain regions. With consumers in Africa often seeking cost-effective solutions, Showmax’s affordability is critical to its growth.

The pricing strategy dilemma

Showmax has big plans for the future, aiming to hit 50 million subscribers and rake in $1 billion in revenue over the next five years. To kickstart this ambitious goal, the platform slashed its subscription fees by nearly 50% during its relaunch in early 2024. However, not long after, Showmax announced a price hike, and MultiChoice,  its parent company, raised fees three times this year alone.

Netflix has faced similar challenges with its pricing strategy. Last year, the streaming giant scrapped its free trial plan in Kenya, and in Nigeria, it increased subscription fees twice in 2024. This delicate balance between attracting users with lower fees and maintaining profitability through price hikes has become a common thread for streaming platforms in Africa.

Both Showmax and Netflix are walking a tightrope: on one hand, they need to remain affordable in price-sensitive markets, while on the other, they must ensure their financial models remain viable as they compete with each other. The question remains whether these price adjustments will help them solidify their market positions—or push customers away.

With rising inflation and increased operational costs, finding the right pricing strategy will continue to be a critical hurdle for all players in the African streaming space.

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