The Next Wave: ‘Namaste Africa’, five years later

Afro-flix, Vol. 1

On the first wednesday of 2016, Netflix launched its streaming video on demand platform in Africa. All 54 countries were welcomed on the same day. No tiered release to privilege countries by population, income, infrastructure or film industry maturity. 

It was, shall we say, an ‘ Africa is a country’ strategy.

Five years later, the reality is different. Nigeria and South Africa define Netflix’s presence and prospect in Africa. Both leaned into historic filmmaking advantages to absorb the innovation more easily than others.

Digital TV Research, a London-based firm, estimates there were 1.99 million Netflix subscribers out of 3.86 million SVOD subscriptions in Africa at the end of 2020. They don’t have a per country breakdown but by 2025, South Africa and Nigeria are expected to add a combined 5.1 million subscribers to increase total SVOD subscriptions on the continent to 12.96 million. 

South Africa’s Queen Sono, Netflix’s first African original series, and Nigeria’s Lionheart, acquired from actor/producer Genevieve Nnaji, announced Netflix’s intent on the continent. 

Following the success of both major projects, Netflix plans to splash on more content in both and other countries.

But will the intended content blitz increase Africa’s Netflix subscriber contribution from the current 0.01%? It depends: on the company’s use of technology to solve access/cost problems, and country-specific macroeconomic factors.

In those 2016 days when they first arrived, Netflix counted on video compression technology to reduce the data African subscribers needed to spend to stream on the platform. 

As such, recent improvements in compression technology, like Versatile Video Coding, will be music to Netflix’s ears. Shorter video load times, greater resolution, more bandwidth for internet providers and lower data costs.

But because this new compression tech is most useful with 5G internet connectivity, which will account for only 3% of African mobile connections in 2025, Netflix may not pin its short-term Africa growth hopes on compression. Instead, the company’s plan to break beyond South Africa and Nigeria will rest on bridge efforts like cheaper mobile-only subscriptions and enabling wi-fi downloads.

However, the success of these technologies will be challenged by something more fundamental: disposable income. 

Nigeria’s annual inflation hit a four-year high of 16.47% in January; food inflation stands at 20.57%. 

COVID-19 may have helped boost video streaming but it fueled an economic slowdown in South Africa in 2020. Unemployment reached a record 30.8% in Q3 and some economists warn that there will be austerity for several years.

The picture from these metrics is not pretty. There’s also the not-so-small matter of competition, from ShowMax and Iroko and eventually Amazon, Disney+ and Apple TV+. The latter three could reduce Netflix’s SVOD dominance in Africa from 51.6% in 2020 to 43.97% in 2025, according to Digital TV Research.

[ Read: MultiChoice’s Showmax is finally positioned to dominate Africa’s streaming market ]

But Netflix’s hope in Africa rests on their first-mover advantage as an SVOD aggregator. “The key characteristic of Aggregators is that they own the user relationship,” writes Ben Thompson, the renowned technology analyst.

“Critically, the user chooses this relationship because the aggregator offers a superior service.”

That’s it: weather indices may forecast a harsh environment for Netflix’s next half-decade, but they will ultimately win or lose by the quality served to the African viewer.

The journey of providing visual entertainment has been an interesting one, from television channels offered by the government and private corporations to pay-tv platforms and now, movie streaming services, otherwise known as Subscription Video on Demand (SVOD).

Convenience, fear of missing out, and a wide bouquet of content are a few advantages of streaming services over traditional methods.  

Netflix set up shop in Africa in 2016, and by 2018, they had gained 400,000 subscribers. Ivory Coast’s Star News Mobile hit 5 million subscribers in 2020.

This was good news for the companies but not Africa’s pay-tv platforms. Their reign as the major provider for entertainment in African seemed to be coming to an end. Multichoice was initially threatened because it seemed Netflix’s entrance into the African market equated to their pay-tv subscribers reducing drastically. 

Showmax, Multichoice’s Netflix clone, was its fighting chance against Netflix. On the one hand, Multichoice put in efforts to tailor Showmax to the African market by reducing its data usage, removing location restrictions, and populating it with hyperlocal content to attract African subscribers. 

On the other hand, Netflix has focused on partnering with more local creators and infusing more African content on its platform. Also, with about 152,588 subscribers, South Africa is Netflix’s primary market in Africa. The country is about to experience faster and cheaper internet services, meaning that internet penetration problems are on track to being solved. 

Coincidentally, the upgrade to cheaper and faster internet service is happening simultaneously. Multichoice’s DStv is planning a price increase for their services.

The war between DStv and Netflix has boiled down to who has a more affordable service across all platforms. While good content will attract customers to both platforms, price will decide who stays or goes. 

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Written by Michelle Adesina