Nigeria: Competition is good news for the airwaves

After only one year operating, NTA-Star TV Network, a joint venture between state broadcaster Nigerian Television Authority (NTA) and Chinese media company StarTimes, has attracted some 400,000 subscribers to its digital terrestrial television (DTT) service. The company, currently in several major urban areas, plans to expand to more markets across the country within the next five years.

The rapid growth of NTA-Star TV is generally attributed to its aggressive pricing behaviour as it charges substantially less than competitors in the digital/satellite pay-TV segment. The monthly fee for its basic package is N1000 ($6.31), significantly undercutting the N2800 ($17.67) charged by its competitor MultiChoice DSTV – a South African firm considered the market’s leading player prior to NTA-Star TV’s entry. NTA-Star TV’s upfront costs are also low as subscribers are not required to purchase a satellite dish. Instead, the company sells a decoder for N7000 ($44.17).

Launched in July 2010, NTA-Star TV initially served five major urban areas (Abuja, Lagos, Kano, Ibadan and Port-Harcourt), and has since spread to Kaduna and Onitsha. The joint venture plans to expand to a minimum of 15 states by the end of 2011 and to cover all state’s capital cities within five years, according to Sophia Zhang, the company’s CEO.

NTA-Star TV’s current packages bundle together some 30 channels, covering news, documentaries, sports and entertainment with both local broadcast services like NTA News24 as well as foreign content, including American networks Discovery World and Nickelodeon.

Although Nigerian broadcasters have seen a rise in audience numbers in recent years, with a 2002 survey by local advertising broker mediaReach OMD estimating the just over 50% of all households have a working television set, viewers tend to concentrate around a few key content offerings. The increase in output from Nollywood studios for the small screen has been one ever-growing attraction but throughout sub-Saharan Africa, one of the biggest attractions for viewers is sports coverage, particularly for European football.

In August, UEFA announced it had awarded the 2012-15 free-to-air media rights for sub-Saharan Africa to StarTimes. Although it might seem unusual that free-to-air rights were awarded to a pay-TV service, the deal could make business sense for StarTimes, since consumers will need to purchase a StarTimes DTT decoder to watch matches.

In addition to its 70% stake in the NTA-Star TV joint venture, StarTimes operates in nine other African countries, including Uganda, Burundi, Rwanda and Tanzania. The company entered these other markets the same way as in Nigeria: by negotiating deals with the state-owned broadcaster in which it offers to invest in digital transmission services that could be used by national and commercial television stations.

While most television stations in Nigeria still transmit using analogue technology, this is set to change. In 2007 the National Broadcasting Commission, the sector’s regulator, unveiled a programme to convert broadcast and communication systems from analogue signals to digital, in a bid to improve reception quality and free up the broadcast spectrum. The target date for total digitisation of all broadcast, cable and satellite operations is 2012.

The mandatory conversion programme means all television viewers – whether watching free broadcast television or subscribing to pay-TV services – will soon enjoy the benefits of digital transmission. Indeed, the vast majority of television coverage in Nigeria is free-to-air. For example, the federal government has estimated the regular broadcast service of NTA has 60m viewers, although this figure is unverified. As of 2010, other free broadcasters included state governments, two local private network services (Africa Independent Television and Minaj Broadcast International) and 15 other private stations broadcasting regionally or to urban areas.

Although NTA-Star TV’s audience may seem small compared to NTA’s estimate of its total free broadcast viewers, the number is comparable in size to other pay-TV services. MultiChoice DSTV had 360,000 subscribers as of 2010, according to Joseph Hundah, MultiChoice Nigeria’s managing director. Local company HiTV claimed 200,000 subscribers at the beginning of 2009. MyTV, broadcasted by Dubai-based Strong Technologies, and DaarSat, the satellite branch of Daar Communications, hold smaller portions of the market.

This number is expected to grow significantly in the coming years, with some estimates for subscription levels – which are largely confined to the middle-income segments of the population – growing at a compound annual rate of 13%.

With significantly lower prices, NTA-Star TV has the potential to greatly expand the pay-TV segment. At the same time, the company’s digital transmission technology investments mean Nigeria is more likely to meet its goal of 100% digital television by 2012, which would benefit all consumers, even those watching free stations.

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