Pay TV in Nigeria: Chinese StarTimes battles for supremacy with main rival Dstv

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Nigeria has set 2017 as its new digital switch over date, but then, can NTA-StarTimes leverage on the extension for a bigger slice of pay-tv market share?, asks Idowu John Bakare

StarTimes, the Chinese pay TV provider, appears unstoppable. Over 3 million active subscribers in 5 years spread across 42 cities in Nigeria, and still counting. That is by no means an easy feat in a country where pay TV satellite television transmission has been dominated by a single service provider for over two decades. Since 1994, Dstv, subsidiary of Multichoice, a South African firm, has bestrode the pay TV sub-sector like a giant. Indigenous pay TV providers that ventured into competition with it either ran out of steam within the first two years of their existence or grew stunted before fading away, with none posing any serious threat to its position as the market leader.

Chairman of Startimes Group

Chairman of Startimes Group

But since its debut in 2010 and after the initial market lull, the Chinese owned company StarTimes, in partnership with the Nigerian Television Authority (NTA) has continued to struggle for a bigger bite of the market share without much qualm. Not only has StarTimes given its rival a run for its investment, forcing a reduction in price and compelling seasonal promotions, it has continued to keep it on its toes, with the people as the ultimate beneficiary.

With the recent shift in the digital migration deadline in Nigeria and the ample chance it offers, the NTA-StarTimes partnership looks good to challenge the dominance of Dstv, its main rival in signal distribution. For one, the Integrated Television Signal (ITS), a brain-child of NTA, is still in embryonic stage. It is meant to operate independent of the government-owned NTA as signal distribution platform after the final switch over. When it becomes operational, the ITS will compete alongside StarTimes and others in signal distribution, transmitting free-to-air channels to viewers across the country. StarTimes is conscious of what the future holds for the pay TV business, namely stiffer competition, hence the renewed vigour to hit a projected 10 million subscriber mark by 2018. The company seems willing to stop at nothing to hit the mark. Its strategy ranges from offering free decoders to customers to installing them at no cost. Ahead of the initial 2015 digital migration deadline, StarTimes embarked on aggressive marketing, reaching out to towns and villages, leaving behind visible footsteps of branded homes, branded rocks and billboards. Today, Startimes is in major cities like Lagos, Abuja, Kano, Aba, Benin, Enugu, Ilorin, Jos, Kaduna, Kano, Markurdi, Onitsha, Port Harcourt, Sokoto, Uyo, Yola, and Ibadan.

StarTimes on the rock in remote road

StarTimes on the rock in remote road

Just recently, StarTimes rolled out the drums to celebrate the fifth year of its pay decoder business in Nigeria and it did so in pomp and style. Indeed, there are good reasons for celebration. The company exceeded its own growth forecast within the first three years of its operations, raking in profits that it projected to make in five years. In just half a decade, StarTimes has garnered over 3 million active subscribers, and is now inching close to Dstv’s record of 5 million subscribers in over 21 years of its operations in Africa’s most populous country. Billy Huayey, an official of StarTimes in Abuja, offered some insight into how the company has been able to navigate the tough terrain to arrive at its current stable position. According to him, the Chinese generally are more business-like. “Our secret is hard work. We studied the market and we were clear about what we have to do, and we worked harder to achieve it. Chinese always work harder”, Huayey was quick to add confidently. However, what Huayey did not add was the fact that StarTimes has a unique selling point which appeals to the general Nigerian public. Like many Chinese products, StarTimes literally democratizes the right to own a digital transmitter or set up box which hitherto were only affordable to the rich, creating opportunity not only for the poor to own a decoder but to maintain it through affordable prices.

For Abdul Tukur, a decoder seller in Abuja, affordability is key. He is particularly happy that he can buy and maintain a decoder at an affordable price. “I used to believe it is the exclusive preserve of the elite, but now not only do l own a StarTimes decoder, l have also bought one for my parents in the village,” 28-year-old Tukur, who also hawks decoders in the traffic, said. Until its last promotion, the decoders went for N3, 900 with one month free subscription and 35 to 70 channels on offer at N1,000 to N3,000 monthly.

While affordability may be one area of strength for StarTimes, there are other areas that have made it more competitive. Content, for instance, seems to be a determining factor in retaining customers’ loyalty. Regardless of cost many would stay with a network provider that can satisfy their entertainment needs. The Chinese firm is not oblivious of this. A variety of local content, enhanced technology and strong tie-in with NTA – the largest terrestrial television network in Africa, all combine to give StarTimes a large war chest to fight for a bigger share where others before it have failed.

History of Pay TV in Nigeria

The history of pay TV dates back to 1994 when the South African-owned Multichoice launched its DStv satellite brand in Nigeria. It was the first of its kind to survive. Earlier comers before it were a few unreliable free-to-air cables that thrived in the early 90s, all of which disappeared unnoticed. However, in March, 2004 Frontage Satellite Television (FSTV) debuted as the first relatively popular indigenous company to operate pay TV in Nigeria. It operated a 25-channel Direct to Home Service in partnership with a UK based company, Kingston Inmedia.

Owned by Otunba Reuben Famuyibo, a lawyer and politician, FSTV had over 20,000 subscribers and was already being seen as an alternative pay TV platform for the masses of Nigerian viewers. But that dream was short-lived. The company soon suffocated and later crumbled under the heavy weight of a more tested Dstv brand, which was then the exclusive preserve of the upper class. There was also MiTV which later changed to Strong TV, and DaarSat, a subsidiary of Africa Independent Television (AIT) owned by business mogul Raymond Dokpesi. But to date neither Stong TV nor DaarSat have been able to present themselves as viable alternatives to Dstv’s dominance.

However, in 2007, another brand known as HiTV, owned by a businessman and lawyer, Toyin Subair, was introduced into the market, raising the hope that a formidable challenger was here at last. And pronto, within two years, the company was able to grow its subscribers’ base to over 200,000 and become popular in Lagos and Ibadan. Analysts ascribed HiTV’s success to the exclusive broadcast rights of the English Premiership League (EPL), which it won from Dstv that year. The EPL is reckoned as the most popular league in Nigeria. Little wonder it became the most sought after content rights for operators of pay TV in the country. Shola Oshunkeye, a soccer sport lover and Managing Director of SUN, based in Accra, Ghana, believed the EPL is synonymous with Dstv. “For many lovers of soccer, it is what makes it thick”, he argued. That explains why Dstv had to renegotiate and eventually out-bid HiTV to regain its exclusive rights over the EPL. Although Efe Obiomah, senior manager with Dstv, would not comment immediately when contacted, another official who pleaded anonymity said “EPL and CNN” remain the two trump cards that currently put the South African firm ahead of StarTimes. “We have exclusive rights over the two“, the official said in Abuja. Though he was not authorised to comment, he dismissed StarTimes as a no match, saying the GoTv brand which is Multichoice’s latest pay TV option introduced in 2011, is positioned to compete and maintain its brand lead over StarTimes.

StarTimes Abuja business office

StarTimes Abuja business office

But then, StarTimes is not alone in the quest to break what many have described as the Dstv monopoly. On a number of times, the issue of Dstv’s exclusive right over the EPL and CNN had attracted the attention of the National Assembly, Nigeria’s highest lawmaking body. Members of parliament often pontificate on their responsibility to make life easier for their constituents. No wonder, the federal lawmakers at different times sought resolutions aimed at addressing what they considered as monopoly in the pay TV sub-sector vis-à-vis the issue of the exclusive rights for the EPL and high subscription rates by Dstv, but without success. 

Digital migration and the NTA-StarTimes Alliance

Significantly, however, the NTA-StarTimes partnership appears to be the final answer to Nigeria’s yearning for a better deal in pay TV. It came handy, at a time when the country was preparing to meet the United Nations deadline on Digital Switch Over (DSO). As Africa’s largest terrestrial TV network with a total of 102 transmission stations at federal, zonal, state and community levels, NTA has a reach that is equal to none in the continent. But it lacked the expertise and financial muscle to deliver the promise of DSO at the required time. But then, its widespread transmission stations are assets that make the partnership an attractive deal. The deal requires it to provide architecture for signal distribution nationwide, while StarTimes in turn provides the digital technology for signal distribution. StarTimes in addition provides set boxes or decoders at affordable rate for its Nigerian consumers, offering its digital technology to help NTA achieve its strategic objectives of DSO and at the same time, remaining the biggest player in the industry.

The gains are much more. Apart from unbundling the entire broadcasting system into specialised subsections, the StarTimes deal opens the space for young talent, many of whom are now content producers. It has liberalised the pay TV sub-sector making it affordable to different class of people. At the moment, StarTimes is leveraging its rising popularity among the low income earners. The partnership removes the burden for the NTA of transmission and associated costs, leaving it with only content production. StarTimes’ intervention has helped in no small measure to fast-track the DSO process. It has also helped to relieve TV stations of spectrums hitherto occupied, leaving the National Broadcasting Commission (NBC) with a large free spectrum to be sold to other broadband users. At the moment, about 172 NTA engineers are undergoing training in Beijing courtesy of the NTA-StarTimes deal. According to Olawale Hamzat, producer and director of “DigiTV”, an NTA educational program, the NTA-StarTimes partnership offers much more than just a business opportunity for the two countries. “It has created limitless opportunities especially for young talent who are now creating content for broadcast.” Little wonder NTA’s DigiTV has embarked on awareness creation aimed at sensitising members of the public on digital broadcasting which without doubt has had a further positive impact on StarTimes’ fortunes. Even at that, the Chinese firm is also not resting on its oar. On August 14, 2015, StarTimes carried out a raffle draw promotion in Abuja, Nigeria’s capital, as part of efforts to give back to its customers. At the end of the exercise, 10 winners emerged with free trips to Germany to watch the Bundesliga courtesy of StarTimes. There were other consolations prizes.

StarTimes has set for itself a new target of 10 million subscribers by 2018. And given its current performance, it appears to be on a steady path to achieving it. Its greatest challenge has been how to tackle the stereotype of poor quality often associated with Chinese products. But smart enough, the company promotes quality assurance as part of its marketing strategies. It offers consumers a one year warranty on its decoders, and after sales services at no cost. And that is working like magic. Yomi Shittu, its sales manager in Abuja, said the company has surmounted the initial problem of lack of awareness and is now poised to take over the market from Dstv, its main rival. Asked to comment on the exclusive rights its rival exercises over EPL, which some soccer enthusiasts see as a drawback, Shittu, sounding rather confident said, “that was an old assumption.” The EPL can no longer be a drawback. His reason:  StarTimes also owns exclusive rights to the Bundesliga, the German league that is rated the second most popular league in the world. “We also own the sole rights of the Spanish League,” he argued. According to him, “the famous EPL is also within the reach of StarTimes if we must get it.” He disclosed that his company is currently bidding for the highly coveted EPL league rights and that they are determined to win.

According to Shittu, StarTimes operates advanced digital technology that is user-friendly. “In the event of power outage which is common here, our decoders skip the booting process and take you back to the same channel in no time. It gives easy access which is cut off by booting”. StarTimes decoders have some unique features which our competitors do not have. One is a modern technology capable of protecting the system against bad weather. “The fact that you can pause subscription as long as you want without losing a kobo of your credit makes StarTimes a preferred option”. But that is not all, StarTimes parades four bouquets with the cheapest price. The lowest bouquet costs as low as N600 with a monthly subscription while the highest costs N3600 per month. Dstv’s cheapest bouquet goes for N2, 600 at the moment, while its highest bouquet costs as much as N15, 000 in Nigeria. “That we made it affordable does not in any way diminish the quality of our product. It is just in line with our policy to bring entertainment to Nigerian homes without sweat”. That said, StarTimes without doubt is on a steady rise, but whether it will meet its projected 10 million target in the next three years, only time will tell.

The report is promoted by the China-Africa Reporting Project

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