Pay TV service providers scramble for Uganda’s growing market

Wrong attitude: For long, the monopoly in Uganda’s pay TV market gave rise to the wrong perception that the service is a high-end luxury facility that is reserved for the wealthy.

KAMPALA.

With about 10 per cent of the more than three million television sets connected to pay TV services in Uganda, the growth in subscriber-base is showing signs of market growth amidst limited innovations.

While pay TV has been in Uganda for about 16 years when MultiChoice entered the market, real growth has only been registered in the past five years.
The growth kicked off with tough competition between DStv and Gateway Broadcasting Services (GTV) after the latter entered the local market with lower packages and semi-exclusive rights to air the English Premier League— the most popular content on these platforms.

In 2008, GTV joined the market and broke DStv’s monopoly that had run for about a decade. In less than one year, GTV had amassed over 50,000 subscribers and consequently forced DSTV to drastically cut on their pricing and increase its channels.

Although GTV subsequently collapsed in January 2009, the carpet for an open market had been laid, giving enthusiastic players an opportunity to venture into the pay TV trade.
By 2007, Uganda had less than 50,000 pay TV subscribers hooked on the ‘expensive and luxurious’ DStv, a service platform by MultiChoice.

However, the number has since grown tremendously. Data from the Uganda Communications Commission (UCC)-the sector’s regulatory body attests to this.
UCC data indicates that there are about 300,000 pay TV subscribers, including the active and inactive categories shared between five pay TV service providers that are actively competing in the market. These are GOtv and DStv; both products of Multichoice, StarTimes Digital TV, MOTV and Zuku TV. DStv and Zuku TV offer satellite television services while GOtv, MOTV and StarTimes offer digital terrestrial television (DTT).

The number of service providers could have been even bigger but others such as Next Generation Services (Smart TV), GTV, Pearl Digital and Cable TV either completely wound up or are inactive.
In a telephone interview with Prosper magazine, Mr Fred Otunnu, the head of communication and consumer affairs at UCC, said while there has been notable improvement in the last five years, there is a gap that pay TV service providers are yet to tap into.

“After the end of the DStv monopoly, the market opened for those with the best offering to the customers. Pay TV prices are stabilising at lower rates, going down continuously as competition keeps growing,” Mr Otunnu said.

He added: “Content has equally improved and people now have more to watch. However, it is not enough going by the dynamics of the market. There is still so much room for improvement in terms of the content provided and the packages offered. Pay TV providers need to find ways of providing a service that accommodates low income earners.”

Additionally, Mr Charles Hamya, the general manager of MultiChoice Uganda, said in an e-mail that the potential for consumption of Pay television services is very high considering that currently; only 10 per cent of all television owners in Uganda are pay TV subscribers. And, the number of televisions and income levels are constantly increasing.

“Compared to 15 years ago when we entered the market, the pay TV industry in Uganda is very exciting because it is growing very fast and customer knowledge about the essence of pay TV has matured significantly,” Mr Hamya said, adding;

“This means the public is now able to distinguish between the qualities of various products and make informed purchasing decisions based on their income levels, programming taste and where they live.”
However, Mr Fred Olangi, the MOTV technical director, acknowledges that while there is a strong desire for the service amongst the population, there is an overriding need to change the market’s opinion about the pay TV services. For long, MultiChoice’s monopoly gave rise to a wrong perception within the public that pay TV is a high-end and luxury item only affordable to the wealthy. The change in perception, he says, can only come with more investments in sensitisation and infrastructure development.

“The market is valid and good as we shift from analogue to digital broadcasting. But we need to interest people who have never had a chance to use pay TV. We need to prove to them that just like mobile phone services, pay TV is affordable and for everyone.”
He added:“Some issues must be resolved. There is a great knowledge gap that hurts usage of these services mainly in rural areas. We are equally constrained by high technology costs, limited government role, limited infrastructure and power outages.”

Market share
Questions are lingering about the market leader in the Pay TV sub-sector. There is no final answer as different stakeholders explain it differently. The explanations range from signal research, subscriber base, brand popularity to content variety. Information shows that it is a two-horse race between MultiChoice (DStv and GOtv) versus StarTimes digital TV.

According to information from UCC, StarTimes is currently the market leader in terms of subscriber base with about 130,000 subscribers, closely followed by Multichoice (DStv and GOtv) with about 100,000 subscribers altogether. Zuku Tv and MOtv have less than 30,000 subscribers combined.
Mr Otunnu said while the total subscriber base stands at about 300,000 subscribers, some are active and others inactive.

“The active subscribers may not match with the number of subscribers as some had bought GTV and Smart TV decoders which they no longer use.”
StarTimes, however, declares even higher figures. According to Mr Simon Arineitwe, the sales manager, his company surpassed the 130,000 subscriber mark early this year.
“UCC has old statistics. Today, we have 160,000 subscribers. Maybe UCC says we had 130,000 active users by mid this year. But from our sales, we have sold 160,000 devices (decoders).”

Meanwhile, MultiChoice could not admit or deny this figure arguing that as a listed company on the Johannesburg Stock Exchange (JSE) they wouldn’t divulge individual country numbers.
“As the only company currently selling DVB T2, the officially recognised migration compliant set top boxes, it would be enough to say we are number one. On DStv given the nature of the technology, we cover the entire country and continent while on digital TV with GOtv, we cover most of the South Central region of Uganda including greater Kampala. However, our signal reaches as far afield as parts of Jinja,” Mr Hamya noted.

Low cost services
In the face of strong market potential, bigger numbers will only be achievable if pay TV services can give even much lower prices with desired content.
Recently, Mr Koenie Schutte, the Southern African Digital Broadcasting Association (SADIBA) treasury, said pay TV providers must improvise ways of tapping into the bigger mobile phones market arguing that mobile phone pay TV is more affordable and flexible.

“In this era, a TV is no longer that set in your living room or office. A TV is now any device on which an individual can be able to access visual broadcast services. Mobile phones and computers work as TVs. The future of pay TV services is in their ability to introduce more innovative service such as mobile pay TV. Companies should thrive and remain relevant to their customers through offering such services.”
Today, mobile pay TV services are slowly taking root in Uganda. StarTimes for example has in less than six months been able to hook about 800 subscribers on its mobile TV services while MultiChoice is also providing this service.

According to Mr Arineitwe, mobile TV was introduced to supplement the already existing range of products such as decoders, LCDs and CRTs.
“People need slimmer, portable and easy to use devices. They are always on the move and thus cannot be home to catch their favorite TV show. This is why we now have car and mobile TVs for people to watch from wherever they are.”

But Ms Christine Mawadri, the Zuku TV country manager, noted that while a lower price is everyone’s dream, it is important to consider the high costs of operations involved before delivering the service to people’s homes.

“Pay TV charges will continue to drop. It is however important to consider that the service is still expensive to offer. We who operate satellite TV services incur high costs of transmission and networking that is reflected on the charges. That is why DTT providers charge less than us,” Ms Mawadri said.

nkalungi@ug.nationmedia.com