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Will new entrants survive Kenya’s vicious pay TV market?

SCI & TECH
By - Macharia Kamau | October 9th 2012

By Macharia Kamau

The pay TV industry has seen a wave of new players as well as increased activity from old hands in the recent past. Worth noting is the focus on the mass market by the new entrants, who see a huge potential in a market that has traditionally been shunned.

But with the industry’s history — where players have entered the market targeting the mass market, only to up and leave after a short period — there are questions as to whether the firms making an entry into the country will sustain their operations.

Fresh in the memories of many are operators GTV and Smart TV, whose stay in the country did not last despite having given customers hopes for bringing about competition and hopefully affordable pricing in the industry that had been dominated for close to two decades by Multichoice’s DStv.

Low cost

New entrants in the market – Multichoice’s GOTV and Chinese pay TV firm StarTimes – have adopted a low cost model and seem to be outdoing each other in terms of who can give consumers rock bottom prices.

But the question remains whether the low cost model is sustainable — considering the rate of failure. And given that those targeting high and middle income market segments have survived with a handful subscribers, could be it that pay TV is simply not a service that the Kenyan mass market is inclined to take up?

Felix Kyengo, the general manager of GOTV said his firm has had operations in Kenya for years and hence has an understanding of the market. GOTV has a strong backing in Multichoice, as well as ties with the national broadcaster KBC – which has a 40 per cent stake in Mulitchoice.

“Our history in the pay TV industry in Kenya speaks for itself. We have strength in content,” he said.

“We are addressing the masses and our pricing and content are focused on this market. We have been able to bring down our prices to a level we feel the mass market is comfortable with.”

He also addressed speculation that GOTV was a reaction by Multichoice to growing competition in the market, saying the firm was born out of need to grow its business in the country.

“Competition is good for consumers because it gives them more choice. Competition will compel us to stay alert and be more responsive to our customers’ needs,” he noted.

“That said, we are not moving because of what competition is doing but to grow our market share and generally our reach in the Kenyan market.”

On its part, StarTimes says it has been successful in nine other African countries – including Nigeria – and will try to replicate that success in Kenya. 

“Quality digital broadcast should not be a privilege but a right for every household. Previously, this has been a preserve of a few but our entry will turn this around by ensuring we provide world class television content at costs that are not only pocket friendly but also offer value for money,” said Steven Ambitho, the marketing manager and spokesperson StarTimes.

Digital migration

“There has been a huge gap in Kenya’s broadcasting industry, where the penetration of Pay TV was very low and what was available was out of reach for majority of the people.”

The two are betting on the process of migrating from the analogue to digital broadcasting.

The process will see consumers either get a digital TV set able to receive a digital signal, or a decoder that will receive the signal and convert into an analogue for viewing on ordinary TV sets.

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