Netflix shrugs off doubts over SA expansion

Netflix, the US-based internet TV service that expanded its offering worldwide this week, including to South Africa, is confident that it can progress locally - despite the flop of similar services here last year.

Altron sold its Node video-on-demand service, which required users to buy and download content to a box, a year after its launch in 2014. It had made a loss of R114-million on the product before interest, taxes, depreciation and amortisation.

In October Tiso Blackstar - which owns the Sunday Times - said it would exit its content-streaming service Vidi "over 12 months".

The service had struggled to gain traction in the market.

MTN, South Africa's second- largest cellphone company, rebranded its FrontRow streaming product to VU last month and cut prices to attract customers after two new streaming services - Naspers-owned ShowMax and Hong Kong service ONTAPtv.com - set up business in South Africa late last year.

story_article_left1

Netflix, the world's largest streaming video provider, told Business Times through its public relations team: "Ultimately, we believe that internet TV has the future ... over the past nine years Netflix has grown to nearly one in two US households.

"We hope to achieve similar levels of penetration everywhere."

On Wednesday, the service was extended to 130 countries - making it available in 190 countries except in China - 18 years after it launched in the US.

CEO Reed Hastings broke the news to delegates at the high-profile Consumer Electronics Show in Las Vegas, saying: "Right now, you are witnessing the birth of a global TV network."

But Hastings said Netflix had "a quarter of the world" to still woo, in reference to the massive Chinese market.

For South Africans, the launch, after many had accessed the service illegally for years, was bittersweet, because it emerged that certain hit shows on Netflix, such as House of Cards and Orange is the New Black, would not beavailable.

Content rights to screen these shows in South Africa are held by MultiChoice, the owner of DStv.

Netflix launches with monthly contracts and three packages: basic, standard and premium, ranging in pricing from $7.99 (about R129) to $11.99.

ShowMax is priced at R99 monthly, ONTAPtv at R89 per month, and MTN's VU has packages starting at R99 a month.

But Netflix's audience here could be constrained.

Liron Segev, CEO of Swift Consulting, said: "It's not for the masses. For streaming services to work you would require a decent internet connection, which is not available to everyone at every location."

A decent internet connection allows for 0.5 megabits per second download speed for standard-definition quality and at least 5Mbps for high-definition quality.

story_article_right2

Depending on the package chosen, a user can watch the content on a phone, laptop, tablet, computer or smart TV after downloading Netflix or linking to the service through an application.

Payment is made via credit card or through PayPal. The user pays for all internet charges in addition to the Netflix subscription.

Segev said: "Those who can afford the connectivity will probably currently already have DStv services and therefore switching to streaming will be cheaper." DStv packages range between R39 and R699.

Last month, fixed-line operator Telkom announced a discounted deal for its Summer Unlimited internet contract users to stream ShowMax video content for free for the month.

But it is unclear whether it could strike a similar deal with Netflix: Telkom did not respond to inquiries.

Netflix said in response to a question on a partnership with Telkom: "Nothing to share here at this time."

Whether Netflix can wrestle South Africans away from DStv, which has the great advantage of its wide-ranging sport content, remains to be seen.