Going out with a bang

"Given what`s happening now with technology changing, platforms merging and the industry evolving, even the telcos getting into the content space, I`m ready for anything. In fact, one of the things we`ve been good at is spotting new opportunities, so I see still so much more ahead of us that`s going to happen," he muses.

Letele admits though that, as is the case with any job, you don`t see yourself doing it forever. Hence his decision to step down from his role at MultiChoice within the next 18 months, "to hand the baton to somebody else, although I will still remain in the [pay-TV] space", he informs iWeek.

AT THE STARTING BLOCKS

When the analogue pay-TV company M-Net delivered its first broadcast in the SA market 23 years ago, the TV entertainment space looked a little different to what it does today. The only other broadcaster was the state broadcaster, the SABC, which existed with its handful of channels. And things hadn`t changed much when digital pay-TV company MultiChoice (at the time M-Net`s sister company) delivered its first digital satellite transmission nearly a decade later, in 1995 - only one other broadcaster had launched, the free-to-air e.tv.

In fact, MultiChoice would embark on what would become a more-than-a decade long domination of the pay-TV space in SA.

The regulator of SA`s broadcasting and telecoms industry, the Independent Communications Authority of SA, may have talked up aggressively opening up the local pay-TV market to competition, but it only licensed four new pay-TV operators in September 2007 to take on MultiChoice`s monopoly, namely eSat, On Digital Media, Telkom Media, and Walking on Water Television.

And since then, eSat has decided to withdraw from the broadcasting race and e.tv has opted to be a content provider for MultiChoice, while Telkom has sold its media business to Chinese broadcaster Shenzhen Media SA.

And to date, concrete launch dates and plans have yet to materialise from the remaining players.

Letele admits he`s not privy to any inside information in this regard, and is watching the press for more detail. "I`ve long given up trying to second guess their next move."

He goes on to say that: "This may sound strange coming from me, but we believe competition is good - it always stimulates the industry, and broadcasting needs that. Competition has a good effect for the economy and for pay-TV, which will enable the market to grow."

"We don`t underestimate our competitors. When the time comes, we will do what we do best. Besides, competition is something we`ve always viewed as existing for consumers` disposable cash, from the cinemas and video stores. Over time, it`s been good for us to have these pressures, as it`s forced us to constantly innovate and come up with new products," he explains.

COMPETITION FOR AFRICA

In the rest of Africa, the market is a different kettle of fish, observes Letele, where competition does exist in the pay-TV market, "so there we`re no stranger to competition".

MultiChoice is active in some 50 countries in Africa, and "we will continue to drive growth in these markets, generally by pursuing new market segments," he says.

"Nigeria is by far the biggest market and has the biggest growth potential overall outside of South Africa. The surprise market is Angola - we recently offered them a custom bouquet of Portuguese channels, and it has just taken off. Africa for me is still largely untapped, which is why it`s so exciting for us," says Letele, who reckons that pay-TV penetration has barely reached 10% to 20% of the continent`s potential.

Growth in SA, meanwhile, is still as strong as ever. In addition to its DStv Premium Bouquet, which offers over 80 channels for R499 a month, and DStv Select and DStv EasyView offerings and a number of other specialist bouquets, three years ago it launched its DStv Compact offering, initially with 14 channels, but now with 35 channels following a relaunch last year, for R219 a month, which has had great success with the black middle class in the country.

"It has taken some tweaking to ensure that it doesn`t result in a mass migration from the Premium Bouquet," he notes, referring to the gradual addition of channels.

"While pay-TV seems relatively resilient to the impact of the recession, and we`ve managed to maintain our gross subscriber growth of 23% a year, we have begun to see more and more customers disconnecting," he indicates.

A CRYSTAL CLEAR FUTURE

MultiChoice also launched its high-definition (HD) products in August last year, including a new HD decoder and general entertainment channel which broadcasts in much higher clarity than any of the existing DStv channels.

Letele indicates that some 41 000 subscribers have signed on for this service to date, and estimates that about 35% of them were already existing PVR subscribers. "At this point our marketing efforts are emphasising the extra-view function, whereby a single-view HD decoder can be linked to any other decoder to enable a dual-view function. However, in early 2010, DStv will be launching a mini-bouquet of HD channels, and will then aggressively begin marketing its HD product," he adds.

Letele reveals that other developments we can look forward to in early 2010 are a PVR decoder with an Internet Protocol port, as well as a slot for connecting other media. "Our main priority is to open the decoder via an IP port, so that subscribers can take content online from a server elsewhere, and possibly even transfering it to another device. That`s just around the corner and very exciting for us, but we are in negotiations with our suppliers, as they obviously want to safeguard their content," says Letele.

As for increased storage space (maximum storage on any MultiChoice decoders is the 500GB storage the HD PVR offers), he`s not making any promises, noting that any increase will dramatically inflate decoder prices at this point.

And before then, by about November, MultiChoice will also unveil a series recording and event-tracking function in its PVR offering, as opposed to the current time-based recording function.

GOING MOBILE

Mobile TV is yet another potentially lucrative revenue stream that MultiChoice is pinning its hopes on.

"We`re good to go basically. We`ve done our trials (MultiChoice started its DStv Mobile trial in 2006), and we`ve learned a lot about the content and the handsets, we`ve done the technical work and are now just waiting for the licence from the regulator," indicates Letele.

"If I were to do a projection, I think the licence awarding should happen quite soon now, hopefully by August/September. We`re targeting the 2010 soccer World Cup with this application. In fact, we expect we`ll miss the boat if we don`t launch the service by then," he admits.

Letele is somewhat reassured by government`s undertaking to Fifa in 2006 that a mobile-TV service will be available in time for the 2010 soccer World Cup.

In the meantime, MultiChoice is learning some valuable lessons from DMTV, its mobile TV venture into Africa launched a year ago under the MultiChoice Africa banner. "We were fortune enough to get licences in Nigeria, Ghana, Namibia, Kenya and Uganda, and we have rolled out the service in all these countries with the exclusion of Uganda. It`s early days yet though," he confirms, noting that "Viewership figures are small at this stage."

MultiChoice is also operating the service on a "free model", which means charging a nominal fee for it, the issue being that the high-spec phones needed for the application are out of reach for most Africans. The pay-TV giant is in the process of partnering with Nokia to offer higher-spec phones at lower prices, possibly as a package with the service.

"But for now, we believe that a low-cost model is the way to go, at least for the next few years," says Letele.

CRYSTAL-BALL GAZING

And looking further into the future, Letele maintains that on-demand viewing is the model of the future. "We`re doing some things in this space ourselves," he says, referring to the trial MultiChoice is running in on-demand viewing. "We`re proving the concept and learning about the technology and consumption patterns for this platform to prepare for its commercialisation," he says. MultiChoice is also talking to its network partners about a linear service whereby viewing can take place online.

For now though, its trial DStv on Demand is only available on the standard-definition PVR to DStv Premium subscribers, while the DStv on Demand PC website is accessible only by subscribers of the DStv Premium and DStv Compact offerings.

"With social networking coming to the fore, and the ubiquitous downloading of content, especially by the youth, these pose certain challenges to the owners and producers of content," says Letele.

"I`m not saying that user-generated content is the answer, in fact, experience all over the world has shown that it doesn`t work in a pay-TV environment. What I am saying is that people will pay for good content as long as you meet the requirement for convenience of access," he explains.

"So the question is just how to serve it up to your users?" Letele muses.