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PAY television operator On Digital Media (ODM) was in the news last week after handing a R120m advertising contract to agency Net#work BBDO.
ODM says it plans to broadcast before the 2010 Fifa World Cup, challenging DStv's monopoly - but how worried should Multichoice be?
A couple of months ago I chatted to Multichoice CEO Nolo Letele about the launch of ODM. He said DStv has always had competition in the form of DVD rentals, cinemas and other entertainment providers - similar to the answer given by holding company Naspers' CEO Koos Bekker when I asked him about it earlier this year.
Neither commented on the direct challenge ODM will present to DStv. Let's be honest, Multichoice really didn't have any competition before.
The sport imperative
Multichoice is firmly entrenched in the SA market. It has used its monopoly to establish a masterful lead and has signed down every sports franchise worth having, leaving the SABC with nothing. Not even soccer.
But contracts have finite terms and Multichoice will soon be met with firm contention when renegotiation is required.
The challenge will come in early to mid-2010, when the first contracts expire. ODM has told me that it will attempt to secure contracts for as many major sports as it can get its hands on. It has also been in negotiations with Multichoice's Supersport network to try and secure content, without much luck.
"They are understandably unwilling to share premium content," ODM's marketing manager Elouise Kelly confirmed.
"We're trying to establish an environment where there is more accessibility."
In sports-crazy South Africa the lack of rugby, cricket and football will limit ODM at first. The company will have to get something from the top three if it is to challenge DStv's grip on the pay-TV market.
No content desert
ODM says it will have everything else, however - children's channels, music, entertainment and even religious programming - but at time of writing the company is not willing to give specific channel names.
"As soon as the ink is dry on the contracts we'll be happy to talk," said Kelly.
"Until then I don't want to pre-empt anything."
International content providers aren't tough nuts to crack; if you have the money, they have the time. So I'd expect the likes of MTV, CNN, Cartoon Network and a variety of documentary channels to form part of the ODM bouquet. Perhaps they'll even try to secure channels like the SciFi channel or Comedy Central that DStv doesn't offer.
The company's CEO Vino Govender has been quoted elsewhere as saying that ODM has identified an untapped market of 3.8 million subscribers in SA.
He could be referring to a niche market ODM will primarily target with specific content, or he may be suggesting a price structure that brings pay-TV to South Africans who can't afford DStv. Time will tell.
Another potential challenger in the pay-TV market will be Super5Media, formerly known as Telkom Media, which was recently sold to Chinese media company Shenzhen.
It is uncertain what Super5Media will offer and when it is expected to launch services, and since the company laid off its communications staff in December we aren't sure who to speak to about it.
Walking on Water TV is another pay television contender, but with a limited market. The company says it aims to "entertain while reconstructing the values of our subscribers through Christian-based television programmes from different genres".
Good luck with that.
I await the launch of ODM's R120m advertising campaign with much anticipation. It'll be interesting to see what Net#work BBDO has come up with - but I wouldn't expect to see any of their advertising on DStv.
- Fin24.com
