On Friday the 28th February 2020, Netflix made history in the African continent history by dropping the very first Netflix Original series starring a female lead actress Pearl Thusi. The series Queen Sono, by front runner by local producer Kagiso Lediga and features an all-star cast, and an impressive production quality that rivals other international shows such as Quantico. Based on my own viewing of the 6-episode series Queen Sono, all I can say is Budget, Budget, and Budget.
It should be noted that along with the large production budget, the roll out that included a massive Public Relations campaign that included a well-documented premier, multiple magazine covers, both local and international publications such as Time, and Entertainment weekly. Proving that in order to have a successful venture, significant promotion is required.
Based on the initial reaction, it seems the investment made into Queen Sono is paying dividends, the series has been the most viewed show on in multiple countries including South Africa, Nigeria and Jamaica. Going forward Netflix is set to be a major player going in the creation and distribution of local stories to a global audience
Netflix – Global
As at the end of 2019, Netflix had 167 million global members, growing steadily year and year out, even though in most recent years it has faced significant competition from the likes of Disney, Amazon Prime and others. Even with such high numbers, the company is effectively in a loss-making position, driven mainly by increased costs of borrowing and the cost of new content. A few years ago, when Netflix which was initially a distributor of others continent then seeked to distribute their own, i.e. Netflix Originals. Just to understand how much they spend, over 50% of cash Netflix spend is on its originals the actual number is 15, 3 Billion US Dollars. Although this is an excessive amount of money, only time will tell if it’s the correct strategy
For example, in the UK Market, Amazon overtake Netflix to becoming the fastest growing vide on demand service in the UK, driven primarily by the idea that they include live streaming of Premier League matches. Although Netflix is still the biggest, it’s worth noting the draw of live sports. When the rights of sports such as Cricket, Soccer and Rugby come up for renewal it will be interesting to see who gets them.
Netflix in South Africa
Netflix South Africa launched in 2018. Although at a significant reduced cost to Multichoice DSTV Premium, the initial perception was that South Africans wouldn’t be fast adopters due to the significant costs of data and needing a Credit Card to sign up for the service. In preparation for the Netflix arrival, MultiChoice a similar service i.e. Showmax.
In the past two years since the arrival of Netflix a few things have happened,
- Dstv premium segment has been losing subscribers (from 2015) as consumers feel the punch of rising costs and a tedious selection of programming;
- Showmax although the biggest streaming service is a loss-making venture, with accumulated losses in excess of R2. 5 Billion; and
- Mutlichoice has gone to the competition commission to request that Netflix be regulated.
What has become abundantly clear from the international market, that the biggest value proposition of DStv is, not movies, TV series, or documentaries, however – it is sport. SuperSport offers DStv subscribers’ excellent live coverage of the most prominent sporting events across rugby, cricket, soccer, netball, boxing, and tennis. And if they maintain those rights, they maintain a relatively safe market position.
SA Market Only
In terms of actual subscription numbers for both the South African Market, and African market Netflix doesn’t disclose the actual subscription numbers. But courtesy of Multichoice, who did their own analysis, they estimated at the end of 2018 that the subscription numbers for Netflix was between 300 000 – 400 000.
In addition, FNB Retail R500 million on subscription and gift card purchases for Netflix, Showmax, and Spotify over the last 12 months the data below shows the increases in FNB customer debit and credit card spend on these platforms.
- Netflix – 110% year-on-year value growth.
- Showmax – 45% year-on-year value growth.
If one can extrapolate the data, you can see how the subscription numbers are looking like. Even though Multichoice is still the biggest player in the market, the gap between them and Netflix is getting narrower
Table 1: Netflix versus Multichoice
| 2018 -Subscription Numbers | +Growth | 2019 -Subscription Number | |
| Showmax | 595 000 | 45% | 862 750 |
| Netflix | *350 000 | 110% | 735 000 |
Source: Multichoice estimated February 2019
An interesting dynamic in the South African market mobile devices make up around 45% of the total, with lean-back (smart TV, media player, etc.) making up around 35%, and web viewing accounting for the remaining 20%. With
Conclusion
It should be noted that in as much as we all hallmark the investment of Netflix into areas of local production. I hope that stories of exploitation in terms of fair and equitable allocation of production profits by Multichoice media favorites such as Ferguson Films, Sabc Tv Vundla Films is not repeated on the Netflix platform.
In terms of next steps, Netflix has indicated that they are in development with numerous creators for productions across the continent and that this is only the beginning.
Links
https://businesstech.co.za/news/media/297640/showmax-subscribers-vs-netflix-in-south-africa/
https://gadget.co.za/streaming-services-in-sa-pull-in-r500m-from-fnb/
The Status Quo 