Challenges & Opportunitities for Digital TV In Africa

© NDS Ltd 2010. All rights reserved.

Challenges & Opportunities

A presentation by Jason Lobel, Regional Director: Africa

Opportunity Markets for Television

EQUATORIALGUINEA

NAMIBIABOTSWANA

ZAMBIA

SOUTH AFRICA

TANZANIA

ANGOLA

MAURITIUSREUNION

MOZAMBIQUE

SWAZILAND

LESOTHO

MALAWI

EGYPTLIBYA

MOROCCOTUNISIA

ALGERIA

WESTERNSAHARA

ETHIOPIA

SUDAN

SOMALIA

MADAGASCAR

COMOROS

SEYCHELLES

KENYAUGANDA

DJIBOUTI

NIGER

NIGERIA

MAURITANIAMALI

BENINGHANA

IVORYCOAST

TOGO

LIBERIA

SIERRALEONE

GUINEA

BURKINAFASO

SENEGAL

CAPE VERDE

GUINEABISSAU

CHAD

DemocraticRepublic

of CONGO

SÃO TOMÉ & PRÍNCIPE GABON

CENTRALAFRICAN REPUBLIC

BURUNDI

RWANDA

CAMEROON

Rep. ofCONGO

ERITREA

ZIMBABWE

Region 1a: South Africa

Region 1b: Southern Africa

Region 2: Portuguese Africa

Region 3: East Africa

Region 4: West Africa

Region 5: French West Africa

Region 6: French Central Africa

Region 7: French North Africa

Region 8: Arab North Africa

Region 9: Horn of Africa

Region 10: Indian Ocean Islands

POTENTIAL

100m TVs across 60m households

Over 100 Locally Produced Channels53 Countries

1 Billion People

SIZE

BUT... LIMITED SUCCESSOnly 1 Pay TV Platform has

managed to exceed 1m Subscribers and rest only have less than 400k each

EVEN FTA IS LIMITED Despite an explosion of FTA players, majority of ad spend in South Africa. Only 1 player has syndicated across Africa

Challenges in the African Television Market

Significant rise in the cost of Premium content particularly sports and these content rights controlled by established players

Access to Content

Cost of production is high with Typical production costs ranging from $7,000-$15,000 per hour

Cost of Local Production

Limited FundingHigh set-up costs

Limited CapitalFinancial System

Few consumer have bank accountsAvailability of funding

Foreign Ownership

Most market have restrictions on foreign ownershipKeep control strategic assets

Advances in the Africa Television Market

Regulatory Framework

New licenses for both private FTA and Pay-TVRegulation of content rights

Emerging Content

Growing market in local productionNollywood - world’s 2nd largest production market

Growth of Free-To-Air

Explosion licensed FTA broadcastersGrowth spurred by liberalisation across the region

Mobile Money

Concept of prepaid is African innovationAfrica is pioneering mobile money transfer

Affordable Pricing

Growth low cost bouquets on incumbent platformsNew entrants in the Sub-$20 range

Sub-Saharan Pay TV Players

EQUATORIALGUINEA

NAMIBIABOTSWANA

ZAMBIA

SOUTH AFRICA

TANZANIA

ANGOLA

MAURITIUSREUNION

MOZAMBIQUE

SWAZILAND

LESOTHO

MALAWI

EGYPTLIBYA

MOROCCOTUNISIA

ALGERIA

WESTERNSAHARA

ETHIOPIA

SUDAN

SOMALIA

MADAGASCAR

COMOROS

SEYCHELLES

KENYAUGANDA

DJIBOUTI

NIGER

NIGERIA

MAURITANIAMALI

BENINGHANA

IVORYCOAST

TOGO

LIBERIA

SIERRALEONE

GUINEA

BURKINAFASO

SENEGAL

CAPE VERDE

GUINEABISSAU

CHAD

DemocraticRepublic

of CONGO

SÃO TOMÉ & PRÍNCIPE GABON

CENTRALAFRICAN REPUBLIC

BURUNDI

RWANDA

CAMEROON

Rep. ofCONGO

ERITREA

ZIMBABWE

EQUATORIALGUINEA

NAMIBIABOTSWANA

ZAMBIA

SOUTH AFRICA

TANZANIA

ANGOLA

MAURITIUSREUNION

MOZAMBIQUE

SWAZILAND

LESOTHO

MALAWI

EGYPTLIBYA

MOROCCOTUNISIA

ALGERIA

WESTERNSAHARA

ETHIOPIA

SUDAN

SOMALIA

MADAGASCAR

COMOROS

SEYCHELLES

KENYAUGANDA

DJIBOUTI

NIGER

NIGERIA

MAURITANIAMALI

BENINGHANA

IVORYCOAST

TOGO

LIBERIA

SIERRALEONE

GUINEA

BURKINAFASO

SENEGAL

CAPE VERDE

GUINEABISSAU

CHAD

DemocraticRepublic

of CONGO

SÃO TOMÉ & PRÍNCIPE GABON

CENTRALAFRICAN REPUBLIC

BURUNDI

RWANDA

CAMEROON

Rep. ofCONGO

ERITREA

ZIMBABWE

Nigeria FTA Players- State FTA: 124 Channels- Local Terrestrial : 8 Players- Cable Operation: 4 Players

East Africa FTA Players- Kenya: 7 Players- Uganda: 24 Players- Tanzania: 5 Players

Ghana FTA Players- 6 FTA Players

Senegal FTA Players- 5 FTA Players

Subsidies into Africa

Launch: R499Pre Top TV: 399 (box only) Launch in Nigeria: Nr9,000

In 2009, the target price for DTT STB was around R700, what will the target price be for DVB-T2 box now?

Government will need to formulate a Strategy to make DTT STBs affordable in comparison to DTH Pay-TV STBs

Current: R299Top TV 2010: R649Current South Africa: 599Pre Star: Nr20,000Current Nigeria: Nr10,000

TV Channels

Radio Channels

Its not just the box pricing…

=

Pay TV Providers will position their entry point offerings to compete head to head with FTA DTT services with

aim of later up-selling “DTT” acquisitions onto higher packages

Lack of Audience Data = Lack of Ad Spend

8

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50

100

150

200

250

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Zim

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Nig

eria

Cam

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Gha

na

Cot

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Ivoi

re

Uga

nda

Ang

ola

Nam

ibia

DR

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Sen

egal

Tanz

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Bot

swan

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Advertising Spend Excl South Africa (US$m)

3,424

968

South Africa Rest of MUSA

Advertising Spend South Africa vs. Rest of sub-Sahara(US$m)

Explosion of Free To Air players over the past 10 years in Africa

Outside of South Africa there are few industry wide Advertising Measurement bodies

Most of the players are small terrestrial operations with limited coverage

BUT CA gives each STB an unique address

User registers for the service and married to STB address

FTV

Signal distributed encrypted Can only be accessed by a STB that

has been entitled to receive the signal i.e. registered users only

Although there is CA, the service is still provided free of charge/subscription

Visibility on the exact number of households addressed and even what they are watching

Free-To-Air (FTA) vs. Free-To-View (FTV)

9

FTA

Signal distributed completely open Any compatible devise can receive the

signal BUT - no way to tell how many devices

are watching or even what they are watching

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OpenEncrypted

Not only who is watching but what and when are they watching...

10

EPG Advertising

Based on the EPG Framework infrastructure of EPG

Updates, the EPG enables operators to create new

revenue streams for advertising using

–EPG real estate

–Program banner

–As overlay on top of video

Ads can be targeted to

– Individuals or groups (based on card id, stb id)

–Channels (services) or Events11

Sharing to Generate Economies of Scale

PlatformA

PlatformB

PlatformC

PlatformD

Content

Headend

CAS SMS

Distribution

12

Ops TeamHeadcount

Call Centre

MUX

CPE

STB EPG

Content

Headend

CAS SMS

Distribution

Ops TeamHeadcount

Call Centre

MUX

CPE

STB EPG

Content

Headend

CAS SMS

Distribution

Ops TeamHeadcount

Call Centre

MUX

CPE

STB EPG

Content

Headend

CAS SMS

Distribution

Ops TeamHeadcount

Call Centre

MUX

CPE

STB EPG

Sharing to Generate Economies of Scale

PlatformA

PlatformB

PlatformC

PlatformD

Content

Headend

CAS SMS

Distribution

13

Ops TeamHeadcount

Call Centre

MUX

CPE

STB EPG

Content

Headend

CAS SMS

Distribution

Ops TeamHeadcount

Call Centre

MUX

CPE

STB EPG

Content

Headend

CAS SMS

Distribution

Ops TeamHeadcount

Call Centre

MUX

CPE

STB EPG

Content

Headend

CAS SMS

Distribution

Ops TeamHeadcount

Call Centre

MUX

CPE

STB EPG

Each Platform compliments its own content with a bouquet of common content+

Single Operations Centre including full operations team & Uplink/Teleport

Common CAS and MUXHosted Call CentreHosted SMS

MUX

Shared Transmission Network DTTCommon Space Segment on a shared transponder(s)

Common STB Platform running Multiple UIs/EPGsCommon Smart Card Platform but individually branded cardsEach Platform still retains its own UI/EPG

Shared Distribution

The Power of a brand

14

Platform Branding EPG Branding

Device BrandingBranded OTT Clients

In Summary

Ensure STB conform to common standard

Develop long roadmap to address entire baseConformance & Brand

Market to be developed

DTT cannot be based on a build it and they will come attitudeContent needs to be compelling

New Players, New Standards

New Platforms

Market has evolved

Consumer Choice

Many players chasing the same consumersOffering needs to be compelling

Economies of Scale

Shared Infrastructure, common STB and EPG to generate economies of scale

Confidential ©NDS Ltd 2009. All rights reserved. 16

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