Africa’s new foothold. Perennially Africa has resembled a market that has been largely ignored in the global media industry though it seems 2022 has brought fortune if not a serious re-birth of African cinema. Such hysteria cannot be so pronounced without talking of the arrival of Netflix on the African front. While the Netflix mania is gripping the space, this has to be reviewed in the context recognising the pre-existence of Disney and other pan-African media streaming giants such as Showmax. It’s undeniable that everyone involved in pan-African content creation is plotting and scheming a date with Netflix, the highly regarded world’s leading premium media streaming platform. Social media around cinema practitioners is abuzz with interrogations pertaining on how one can be relevant to the giant premium platform. Certainly such obsession in the industry termed “Netflixification” deserves a close introspection on its worthy through unravelling the secrets of the giant from all its impeccable sources guided by principle of professional scepticism.
Africa indeed in the era of digital convergence and the uptake of Over-the-Tops (OTTs) or Video on demand (VOD) platforms has not only seen a disruption to its primed traditional television but marked a new epoch. Most pan –African television channels are closing shop to cross the floor focusing on the more lucrative and growing business of production, particularly international streamers. This is highly visible in most of Africa’s 54 countries. There has been a filament of recent deals among African film and TV producers as global studios and streamers. This marks a sharp change from decades in which African talent and the African market were neglected, ignored or dismissed. Going forward, the uptake of subscription VOD users in Africa is projected to reach 5 million by end of 2022 and triple to 15 million by 2026 a projection by Digital TV Research, London based business Intelligence Company. New researches from the business intelligence further points to surging growth as consumers sign up for over-the-top (OTT) video services in conjunction with traditional direct-to-home (DTH) satellite pay-TV services or abandon satellite TV in favour of streaming.
The demonstrated gaps and envisaged potential has seen a change in reflex by the techno-giant Netflix that is to think if not look Africa. Review on Netflix show that it is a conglomerate traced from USA where it originates. Its arrival in Africa has seen a lot of nostalgia by African filmmakers who prime it based on speculations concerning its capital depth though many wonder if it’s a healthy praiseworthy opportunity or mere pensiveness, dreaminess or wistfulness. Netflix prides itself of a global market share of over 50% coupled by massive global growth in the streaming business as a success factor. In its formative stages, it managed to be visible in 50 countries in USA followed by an exponential growth to 190 countries globally over a period of 7 years. Statistics reveal that by 2017, Netflix had settled for 130 million subscribers globally with 73 million worldwide viewers, accounted for outside USA. Presently in Africa, Netflix accounts for over 50% of the continent’s streaming subscription service competing with Disney, Showmax and other OTTS of note. According to Dataxis latest research, Showmax and Netflix are the dominant players in the SVOD market with a market share of 31.6% and 29.7% of subscribers respectively.
Netflix currently leads Africa, with just shy of 2 million subscribers, according to Digital TV Research. Showmax comes in second with 688,000 direct subscribers, but that figure doesn’t take into account subscribers to MultiChoice’s pay-TV service, DStv, for whom Showmax is offered as a free or discounted add-on to certain subscribers. MultiChoice, which was spun off recently from internet and media giant Naspers Ltd., Africa’s largest company, confirms that Showmax and sister brands GOtv and DStv now have 20.1 million subscribers combined. This really confirms that Netflix’s existence in Africa is not without competition.
On a country to country basis, Nigeria and South Africa takes a lead in embracing the Netflix platform. One of TV pioneers in Nigeria, Mo Abudu, the owner of EbonyLife Media accompany is believed to be among a few to be beneficiary of a multi-title deal with Netflix.
The deal has seen a human trafficking drama Oloture, a domestic abuse drama Blood Sisters, period epic Death and King’s Horseman and a series Castle & Castle, a Nigerian legal drama coming aboard the platform. Presently a total of 40 movies of Nollywood origin are on Netflix site. Similarly this has marked a new turn of events as real explosion, a real tipping point for African content for 20 years. The success story goes beyond Nigeria with a charming romcom Zimbabwean movie, Cook Off written by Tomas Brickhill coming aboard. A South African rollercoaster spy action thriller, Queen Sono dubbed Netflix’s first script-to-screen African Original Series also came aboard in 2020. Cameroon is not left out with four film titles, The Fisherman’s Diary, Therapy, Broken and romcom A Man for The Weekend. Netflix hosts many African reputable projects such as The Wedding Party, Nigeria; The Queen of Katwe, Uganda; The Boy Who Harnessed the Wind, Malawi; Beasts of No Nation, Ghana and The Congolese National Park documentary Virunga among many titles.
While Netflix may be primed in Africa as a new proponent of hope, its past internationalisation or exponential globalisation thrust cannot be ignored as it went through a three pronged if not a three stage expansion process. Indeed such resilience and perseverance is huge take away for Africa if any of our local conglomerates think either east or west in similar global growth. Netflix’s global growth is a big factor in the company’s success. Its globalization strategy, and many of the challenges it’s had to overcome, are unique and draw many take-away for Africa.
This indeed remarkable achievement for a company that was only in the U.S. before 2010 and in only 50 countries by 2015 and now in 190 countries globally. Netflix’s success can be attributed to two strategic moves namely a three-stage expansion process into new markets and the ways it worked with those markets which other companies looking to expand globally can use too. Netflix did not try to enter all markets at once. Rather, it carefully selected its initial adjacent markets in terms of geography and psychic distance, or perceived differences between markets. For example, its earliest international expansion, in 2010, was to Canada, which is geographically close to and shares many similarities with the United States. Netflix was thus able to develop its internationalization capabilities in locations where the challenges of “foreignness” were less acute. In doing so, the company learned how to expand and enhance its core capabilities beyond its home market. In that sense, the first phase of its globalization process was consistent with the traditional model of expansion. But from the experience and learning it gained in that process, Netflix developed the capabilities to expand into a diverse set of markets within a few years.
In its second phase, Netflix was involved in a faster and more-extensive international expansion, extending its footprint to some 50 countries, drawing on the lessons it learned in the first phase in order to operate in a wider variety of markets. The choice of those markets was influenced by their degree of attractiveness, such as from shared similarities, the presence of affluent consumers, and the availability of broadband internet. The second phase helped Netflix continue learning about internationalization and partnering with local stakeholders while also growing its revenue. Since this phase involved expanding into more-distant markets, it was supported by investments in content geared toward the preferences of those geographies, as well as technological investments in big data and analytics.
The third phase, during which a much-accelerated pace of entry brought Netflix to 190 countries, used everything it had learned from the first two phases. It had gained expertise in the content people prefer, the marketing they respond to, and how the company needed to organize itself. Now Netflix focused on adding more languages (including for subtitles), optimizing its personalization algorithms for a global library of content, and expanding its support for a range of device, operation, and payment partnerships. Six months after entering Poland and Turkey in 2016, for example, Netflix added the local languages to its user interface, subtitles, and dubbing. As with the markets it had entered earlier, the company launched a service targeted at early adopters, and then iterated quickly to add features to attract a wider audience.
In all its three growth stages, Netflix adopted a handful of strategies; the adoption of Netflix originals, creating content for local for local and local for international. In all this, Netflix equally embraced local language though with a local for global market principle thus producing originals in 17 markets beyond the local for local tag. While antiquated on the belief that “great storytelling transcends borders,” Netflix responded to customer preferences for local content. Importantly, Netflix sees such content production as not just local-for-local, but also local-for-global. In other words, it aims to have content attract an audience not only locally, where it is produced, but also more widely. As such, Netflix potentially reaps the benefits of investing in local content all around the world. As part of addressing the protracted process of signing content deals with major studios on a regional or local basis, as its key strategy it is increasingly pursuing global licensing deals. The common belief is that it intends to provide content across all of its markets at once. Netflix has also begun to source regionally produced content, providing a win-win for these producers, whose local content can find a global audience. Indeed such knowledge on strategy is imperative for anyone who wants to be in courtship Netflix.
Analysts in form Louis Brennan, a professor at the Trinity Business School at Trinity College Dublin have had an opportunity to have an understudy of the Internationalisation roadmap by Netflix in its Global licensing deals on its Internationalisation drive around international business and operations strategy. He proposes that elements of Netflix’s expansion strategy constitute a new approach that is called exponential globalization. It’s a carefully orchestrated cycle of expansion, executed at increasing speed, to an increasing number of countries and customers. The approach has helped the company expand far more quickly than competitors. Going forward, however it is believed that Netflix will face increasing competition not only from other global players such as Amazon Prime but also from new entrants and regional or local players.
In that regard, it will have to continue to expand its blending of global and regional content. As a takeaway for content creators there is need to observe its direction with an arbitrage intend. Presently as an African market due to technological factors, including the absence of high-speed broadband and a very low level of internet penetration it remains a convoluted challenge. Netflix and the global society still view Africa as with a growth potential in the internet in general, including on phones, tablets, and smart TVs, Netflix making the destination viable option.
Whilst Africa remains poised for potential growth around technological investment and big data, the issue of optimization and personalisation of algorithms on global library of content remains a challenge. The data on existing products remains missing to make it a worthwhile investment destination. Having acknowledged context and with fear of getting off the hook allow me to point to the critical ingredients of readying us as Africa to move in sync with dictates of streaming platforms. Having pointed the existence of algorithms indeed the question will be on the why and what if analysis. From a historical context of Netflix’s three stage growth evidence show that it places emphasis in developing customer-centric models or deep customer insight if not predictive algorithms in improving its global expansion. This involves experimentation with customer usage data to determine which offerings work best performance of thus improving its predictive algorithms. This is a world of Artificial Intelligence (AI) that controls what to Stream on its platforms.
Such deep customer insight to African markets using that knowledge to create content that appeals to a wide range of customer segments becomes the economies of scale in terms of competition with our local OTT platforms. In all this, the intention is to pin point on the major deficiencies in existence in many territories as most filmmakers think the artistic success is the answer yet there is much involved than meet the eye to turn around African cinema into real business. In the context artificial intelligence as Africa we should develop country-specific knowledge around our local markets. This knowledge needs to be both broad and deep, extending across political, institutional, regulatory, technical, cultural, customer, and competitor domains. Understanding local cultures ensured that Netflix could be sensitive to and respond to their differences. This enhanced credibility can help us forge smooth relationships with key stakeholders thus our preparedness to embrace this transformation. If all African film industry can embrace the investment in data science, it will help improve our standing on global arena and thus create immediate synergistic benefits with international streamers.
Expansion on support for device, operation and payment partnerships, and increasing mobile experience has also seen Netflix manoeuvre beyond territoriality. Therefore due to projected growth in mobile devices in Africa there is need to improve relations with device makers, mobile and TV operators as this presents with other clearly defined opportunities in embracing streamers. Recognizing that in some parts of the world, particularly emerging and developing economies, mobile devices are the primary way most people access the internet, Africa should also begin placing a greater emphasis on improving its mobile experience, including sign-ups, credentials and authentication, the user interface, and streaming efficiency for cellular networks. This also has to be coupled by developing relationships with device makers, mobile and TV operators, and internet service providers as well.
In conclusion the existence of Netflix remains a positive as the company is coming into Africa with experiences obtained from other territories. Governments have to respond positive though every state has to adopt its own protectionist policies. Countries have to create favourable and conducive national regulation restrictions and embracing local language programming. In many states content is predominantly accessed through free to air models thus condemning the consumers into non-paying populace. This In turn creates subscribers accustomed to free content working against the metrics of the industry.
I hope the article will help bring the general idea though I acknowledge the area to be broad and at times information obtained may be out of limited privilege. Views expressed in this article must not be treated conclusive. Any decisions made out the foregoing, a disclaimer applies.
Leonard Chibamu is a financial analyst, practising film writer, director and producer. He is a registered Arts promoter and director of LeoChi Media Consultancy firm registered in Zimbabwe. He is studying towards a PhD with research interests in Film Financing matters. He participates in many Pan-African platforms advocating for financing and bankability of African Cinema. Currently he is the Executive Producer of a drama series Village Secrets showing on ZBC TV. Feedback +263773292646 e-mail chibmediastudios@gmail.com Facebook: Leonard Chibamu.
