How will South Africa’s quota imposition for local content play out?
By Antony Mutunga
In 2016, without any warning, Netflix was launched in Africa; the streaming service was suddenly available in all African countries. What followed was a mixture of excitement and suspense in the continent. While some were overjoyed at the prospect of more options besides the likes of DSTv, which were the only provider of similar entertainment, others were concerned about the pricing and whether many could afford it.
Years later, Netflix has grown popular to become the leading streaming service on the continent. According to Digital TV Research, Netflix accounted for 57% of the Subscription Video on Demand (SVOD) subscribers at the end of 2020. But despite its popularity in a continent of 1.34 billion, with its 2 million subscribers, is this the best that Netflix can do?
Lack of infrastructure and lack of connectivity has been some of the main reasons why many Africans fail to access streaming services such as Netflix. Many Africans, to date, still do not have access to robust Internet as a result of the poor network, especially in rural and remote areas. Even though connectivity has improved over the years, many Africans still depend on 2G and 3G networks as compared to 4G or the latest 5G technology. With such speeds, it is near impossible to stream.
Additionally, the cost of data remains unaffordable. Comparatively with North America, the lack of well-established infrastructure has seen Africa unable to cut cost further. As a result, many Africans continue to prefer movies and tv series, mostly pirated, or pay for local screening avenues.
Smartphones to the rescue?
One thing, however, seems to be working in Netflix’s favour. With the rise in popularity of smartphones, a shift has been taking place and streaming services have taken a hold. According to the Mobile Economy Sub-Saharan Africa 2020 report by GSMA, 477 million people in Sub-Saharan Africa subscribed to mobile services, accounting for 45% of the population in 2019.
As a result, many streaming services, Netflix included, now offer their services on mobile phones through mobile-only subscriptions in several countries like Egypt and South Africa. In entering a partnership with local mobile operators, the streaming service hopes to reduce the access price for access to their services as well as a way to help its subscribers have offers on data prices as well.
Another huge challenge that Netflix faces is its comparatively small percentage of local content. Most Africans had been grown accustomed to a mix of international and African entertainment as especially offered by the likes of Multichoice and Pay TVs. Therefore, Netflix had to start including local content to attract more Africans to their services. And they did, from Nigeria to South Africa to Kenya, Netflix has been able to produce several African films and series that have seen many subscribe. Examples are Lionheart from Nigeria, Poacher from Kenya, and South African series such as Queen Sono and Blood & Water, which continue to showcase the level of creativity in the African film industry. However, most of the service’s shows and films remain international.
The South African government, through its Department of Communications and Digital Technologies (DCDT) in the last quarter of 2020 proposed to impose a 30 percent local content quota on international streaming services, in a move aimed at promoting local creatives. In addition, the government also looks to include a change in the existing legislation to force streaming services and the likes of MultiChoice (DStv) and StarTimes to pay licenses.
Netflix argues that will not produce the results the government expects. According to the streaming service, by imposing a quota, the company will be forced to reduce the number of international shows it brings to South Africans. The company argues that due to a large number of international series being covered by Netflix, the company may not acquire the requisite number of local shows that meet its quality requirements. And because, in the case of Netflix, the motto has always been quality before quantity, the streaming service will have to reduce the number of shows to meet the quota, if the proposal is passed.
The other way around it will be for the streaming service to include local content regardless of its quality. Looking to reach the quota, budgets will have to be stretched thin and thus films and shows produced will not be up to par with what Netflix has offered so far. Additionally, forced to pay licenses, the streaming services will mostly move the burden to the subscriber, increasing the cost to access the streaming services, locking viewers out.
Without a doubt, there is a need for more local content in streaming services but there is a need to consider the argument from Netflix before making a decision. Governments needs to invest more local content and so do streaming services. Many African countries will be keeping an eye out for the outcome in South Africa, depending on how it plays out, it will shape the future of not only streaming services in Africa but of many online businesses as well.