Consumers to win big as content distributors jostle for market slice

ns are staring at lower prices in the coming months, following increased competition in the content distribution network that has seen more firms venture into service distribution.

Data from a recent Geopoll survey stated that Kenya has the fourth highest penetration of smartphones with young people heavily relying on social media for news. The study indicated that Kenyan consumers are the third most likely to have two smart phones although data costs still remain high impeding adoption outside urban areas.

Wiith more service providers laying down network infrastructure, competition is set to drive price downwards as service providers attempt to woo consumers to their networks. Facebook last month unveiled a new partnership with Internet Service Provider (ISP) Surf to provide public Wi Fi in residential areas around Nairobi and satellite towns.

The partnership will see Facebook’s Express Wi-Fi deployed through hotspots close to markets, matatu termini and communal spots where anyone with a Wi-Fi enabled device can get online. “We want to expand the Kenyan consumers’ options for Internet access by offering fast, radically affordable Internet services where they live, work and play,” said Surf CEO Mark Summer, during the launch of the network in March.

Currently, there are more than 260 ISPs operating in the country with more lined up to set up shop, buoyed by the recently enacted digital migration laws. This is expected to further drive down the cost of broadband making high speed streaming of online content cheaper for more Kenyan consume

Safaricom last week during the release of the firm’s financial results for the 2016/17 financial year said it was launching a new department within the firm, Safaricom Home, to offer service provision as traditional revenue streams from voice and SMS dwindle. “Safaricom Home is the new unit that will be dealing exclusively with our residential customers to provide connectivity to homes because we have realised there is a big opportunity in this area,” explained the firm’s CEO Bob Collymore. The unit will ride on Safaricom’s fibre network infrastructure offered to corporates through its enterprise division with 16,000 homes already linked across the country. This is not the first time Safaricom is taking a swipe at Kenya’s broadcasting industry.

In 2015, the firm launched the Big Box, a digital set top box that doubles as a WiFi router. The Big Box however failed to excite consumers with Collymore stating that low connectivity hampered adoption of the device prompting the firm to change it’s strategy to capturing the broadcasting market.

“We realised that in order for the big box to succeed, there first had to be good connectivity to facilitate the streaming of heavy content for a good user experience,” explained Mr Collymore. Today, increased connectivity, new regulations and the reducing costs of tablets and smartphones in the country has led to a shift on how consumers access and consume their entertainment content.

Data from the Kenya National Bureau of Statistics (KNBS) indicates that Kenyan bandwidth consumption has more than quadrupled in the last five years from 264,426Mbps in 2012 to over 860,300Mbps last year. When it comes to consuming content through the mobile phones, the increase in data consumption is astronomical. In 2012, Kenyan consumers utilised broadband at 1.8 million Mbps. By last year this number had hit 12.5 million Mbps; an a 600 per cent increase in consumption.

The migration from analogue to digital broadcasting effected in 2015 further reduced the capital spend required by individuals and firms seeking to roll out content distribution services.

These are the numbers that have led content distribution providers like Netflix and Showmax to make a foray into Kenya’s entertainment industry in a bid to establish a strong presence.

Showmax launched in South Africa in 2015 and owned by giant media conglomerate Naspers which also owns MultiChoice, has gone a step further to cement its market share and stave off competition

When launching its services for the Kenyan market, Showmax included a special two-tier option allowing consumers to chose from ShowMax Premium priced at Sh880 per month and ShowMax Select that is priced at Sh330 per month and is marketed as a mobile first offering. “We don’t believe in one-size-fits-all solutions,” stated Mr John Kotsaftis, general manager of ShowMax

“Kenya has different needs and tastes compared to other countries and deserves something designed specifically for Kenyans.” ShowMax has singed a partnership with Safaricom to allow consumers access local shows and pay for the same using M-Pesa.

“It’s the first service to be optimised for mobile usage which means the consumer uses much less data at an affordable price point,” he said. In addition to this, ShowMax earlier this year revealed that it had signed another partnership with fibre connectivity provider SEACOM to place servers in Nairobi to better serve its East African audiences.

“The net effect of placing servers in Nairobi is that customers can pull video content from much closer to home, which means faster response time and less buffering. This move also lays the groundwork for expansion in East Africa as we continue to rollout ShowMax in new countries,” explained ShowMax’s Head of Distribution Mike Raath.

In setting up the servers in Nairobi, ShowMax is following in the footsteps of Netflix which last year announced it was putting up servers in Nigeria for the same reason. ShowMax further hopes Kenyan servers will provide opportunities for local ISPs to lower costs and pass the same to consumers.

“Local ISPs will now be able to get ShowMax content from within the country rather than having to pay transit costs from servers based thousands of kilometres away,” he said.

While the digital streaming service providers continue to make inroads, satellite distribution firms that once controlled the market and still hold a huge portion of it have been forced to re-evaluate their strategies to stay afloat.