Some Cash In As Kenya’s Analog Switchoff Hits Homestretch

Some Cash In As Kenya’s Analog Switchoff Hits Homestretch

If Kenya’s analog switchoff was to happen today, a large chunk of Kenya’s TV audience would be wiped out, throwing the advertising business into a tailspin.

Although the World TV market plans to complete the transition from analog to digital by June 2015, Kenya has brought this deadline forward to June 2014, resulting in a court dispute between leading broadcasters and the Communications Commission of Kenya.

“An estimated 55 percent of TV audiences will disappear and with it, the advertising business,” said Lenny Ng’ang’a, managing director of Nairobi-based Saracen Media, in an AFKInsider interview. “However, the biggest beneficiary in all this will be the radio where most advertisers will take their money as they seek for alternatives.”

In Kenya it costs approximately $2 million to set up a fully-fledged TV station. This figure includes cost of putting up the broadcast transmission equipment as well as the studios.

“When the TV signals move from the analog to digital platform, the number of channels that viewers can access will increase exponentially,” said Ng’ang’a. “There will be new products coming into this market such as video-on-demand, allowing subscribers to pay for them using the mobile money transfer platforms.”

South African-based pay TV firm DSTV currently offers subscribers content on their cell phones; digital migration will open up more opportunities.

When the migration is complete, there will be no need for broadcasters to invest in masts, meaning content providers will increase in number.

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But it is the price of set-top boxes that is a concern to many Kenyans. Set top boxes turn the source signal into content in a form that can then be displayed on the TV screen.

“We are not opposed to the migration process but would like consumers to have access to both analog and digital signals until the end of this year,” said Stephen Mutoro, secretary general of Consumers Federation of Kenya, in an AFKInsider interview.

It is still unclear how many viewers have migrated. The Communication Commission of Kenya puts the number at 700,000 against the 300,000 given by the consumer watchdog, Consumers Federation of Kenya.

Either way, the number of digital boxes in the market is insufficient, and some people think businessmen wish to create an artificial shortage and push up prices.

Premium digital TV providers have been on intense marketing campaigns to sell their technology at the expense of educating the public on their offers.

“The elephant in the room is that most consumers are still unable to afford the digital boxes,” Mutoro said. “A move by the government to set up the Kenya Consumer Protection Advisory Committee is a step in the right direction.”

While Kenya’s broadcasting industry is undergoing tremendous change as technology shifts from analog to digital across all broadcasting platforms, consumers appear to be missing out.

Presently, the few pay-TV providers are involved in a bidding battle to air English premier league matches, popular in Kenya.

“Migration is a process and not an event that will give consumers more choices,” said Mutoro.

Many Kenyans still do not know the difference between free-to-air and pay TV. In addition, there is need to educate consumers on the differences between cable, satellite and terrestrial platforms that are currently used to access TV broadcasting services so that consumers have sufficient information to make informed decisions.

This lack of clarity has led to some consumers feeling uncertain about which equipment to purchase in order to continue receiving their favorite programs on digital platforms.

The government has already warned that consumers are being misled into buying pay-TV set top boxes for cable or satellite when they actually want free-to-air set top boxes for digital terrestrial TV.

“With the clock ticking towards the June 2015 deadline, worldwide dealers and manufacturers of set top boxes appear to have cornered the market, pushing up prices of this equipment,” said Ng’ang’a.

In Kenya, Equity Bank is cashing in on the huge demand for set top boxes by offering financing to enable customers to buy this equipment. Some other financial giants have been reluctant to travel down this road.