In 2017, I wrote that the video-on-demand (VoD) market in Africa must adapt to thrive. The competition is never localized but globalized which means these entities are not competing with local companies but any entity in the world. Within the unconstrained and unbounded Internet distribution mechanism, local startups have bigger markets but are also exposed to massive global competitive forces. I explained this element in a recent Harvard Business Review piece. The video below made the case also.
Those forces have consumed one company in Africa. Yes, Econet’s Kwese, the online on-demand video company, has collapsed. That is very unfortunate but not unexpected: “It is a difficult decision that we could not postpone…, market conditions and content price inflation got in the way of us completing our mission”.
Press release on click.
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“It is a difficult decision that we could not postpone. Over the last 4 years we sought to disrupt Africa’s media landscape and enable Africa to tell its own stories using a variety of technologies including satellite broadcast, video streaming and free-to-air TV. The Econet Group invested heavily into Econet Media and supported the business over the period it operated without any third-party funding. Unfortunately, market conditions and content price inflation got in the way of us completing our mission.
We are particularly grateful to all our dedicated staff and contractors who have worked tireless to bring a great product to market and who until the last day believed in the Kwese story. We are also grateful to our customers and our partners who believed in the Kwese vision and who worked with us as we tried to change how Africans consume and pay for media.
We deeply regret the impact that this decision has had on our staff, contractors, customers, regulators and content providers. We will engage with each of our valued stakeholders transparently and will seek to meet our obligations to each of them as provided under law.
The Econet Group is entrepreneurial and believes in Africa and its potential. Our belief in “an inclusive connected future that leaves no African behind” remains undaunted.
We would like to emphasise and reiterate that the rest of the Econet Group businesses continue to operate normally as each of our companies are separate legal entities with their own management teams and boards.”
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Another ‘disruptor’ has been disrupted, and the funeral song is still tintinnabulating around many more, even Netflix has issues to contend with.
I think we need to reach a sort of consensus – to be able to strike the right balance between affordability and sustainability, otherwise expect more dust biting in the near future. We often celebrate ‘win’ for consumers, with plethora of choices on offer, which directly or indirectly fuel price wars, leaving many operators with injuries and bruises, with some fatalities as well. The problem is that the supplier side sings a different song: the content producers charge more, original contents are becoming too costly, and you still have to pay top dollars for top talents!
When you run the numbers, you suddenly realise that ‘continuous innovation’ may no longer be enough to keep you afloat, profitability is not even contemplated in the medium term; meaning that you will continuously be bankrolled until your backers run out of money…
We simply need a reset, especially in the area of pricing, else many more businesses will run fast into a hole.
Kwese had a promise but as you said, it fell. Like Kalahari, Mocality, etc, digital will produce many failed missions until the inflection will happen. 2022is my magic year.
Quite terrible to see them shut down.