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Satellite television: A year of hypes and downs
by Ida van Tonder
When local satellite viewing took to the skies, the broadcast industry and the media were thrilled with the prospects ahead. Now, a year later, high expectations have crashed back to earth.
On 3 August this year, the satellite PAS 4 celebrated its first birthday in space. Though PAS 4 is now beaming down its pleasures to 44 000 Multichoice DStv subscribers and an unknown amount of free-to-air AstraSat viewers, the last year has been a rocky road for the satellite broadcasting industry. It has claimed many a casualty in the race for the stars - and the South African consumer’s pocket.
Months of hype and speculation around space-age viewing in South Africa culminated in November-December last year, with the official launch of the first satellite viewing channels. Long-awaited by media observers and viewers alike, this breakthrough was marred by delay. The launch of PAS 4 - on which Multichoice and the SABC lease transponders from its French private owner PanAmSat Incorporated - was expected to take place in June, with channels operational in September.
However, the satellite only settled in space on 3 August, beaming test signals till December. By the end of that month, Multichoice was transmitting its bouquet of entertainment, winning the first round in the race for the stars.
The non-starter
A bag of empty promises had been revealed by November last year, as growing media anxiety marked African Satellite Entertainment Corporation (ASEC) as a drop-out in the race to transmit. ASEC, a joint venture between the Swazi Television Broadcasting Corporation and United Satellite Network (USN), had promised cheap analogue transmissions - starting off with four free television channels - since the launch of PAS 4, on which it, too, would lease transponders from the French company PanAmSat Inc.
But it failed to finalise programme content, nor could it find a backer. By January this year, the service had not been launched, and the Financial Mail reported it was "...no longer transmitting its test broadcasts." AstraSat general manager, David Niddrie, comments, "Yes, we were considering a joint venture with ASEC at a stage. But I suggest you forget about contacting them. ASEC was a bag of empty promises."
Analogue or digital - a tough choice
Affordable direct-to-home satellite viewing may well now be a reality to the South African public thanks to Ku-band signalling, requiring a dish of no more than 90cm. But since the middle of last year it was evident consumers would be faced with tough choices that could turn the purchase of satellite equipment into a nightmare. The SABC’s satellite unit, now AstraSat, and the independent ASEC chose analogue mode, while Multichoice announced it would beam its new bouquet of sound and entertainment channels digitally, while transmitting the M-Net domestic channel in analogue.
The service provider may choose how it would beam its signals. Digital technology allows six channels to be transmitted from each transponder, or signal reflector, on the satellite. Digital advantages include a compressed signal, making it cheaper for the broadcaster, and better image quality. Analogue technology, used in traditional terrestrial broadcasts, allows only one channel per transponder, making it more expensive for satellite broadcasters. Digital and analogue reception equipment are not interchangeable, the digital rig being more expensive for viewers.
By late last year, rural South Africans with an eye on analogue equipment to receive the M-Net domestic channel, were dealt a blow by Multichoice: all its analogue transmissions would cease after an initial test phase, forcing these viewers to invest in expensive digital equipment if they wished to receive M-Net via satellite.
Expectations that the SABC would broadcast a mixture of digital and analogue channels were doused in December, when it announced all its satellite transmissions would be analogue. AstraSat’s current policy on digital transmission is spelt out thus in its Website, "Although (AstraSat) is investigating the possibility of launching a digital service at some point in the future...any digital service will be an add-on...AstraSat will continue to use analogue at least until the second decade of the 21st century."
Viewers are now left to make a tough choice between the two remaining broadcasters. Acquiring both digital and analogue receivers is too expensive for the South African pocket - only a handful of viewers would make this investment.
Why, if a relatively small South African market is split by conflicting technologies, have role-players chosen to differ? The answer lies in two divergent perceptions of the South African market needs. A conference entitled "The Great Digital Debate: Sentech versus Orbicom", hosted by the Centre for Cultural and Media Studies at the University of Natal, revealed the rivals’ marketing approaches were indeed worlds apart.
Neil Smuts, managing director of Sentech, AstraSat’s signal distributor, justified theirs: "Our aim is to make our services accessible to all people, all over the country, therefore not ‘financially excluding’ the average citizen. Analogue gives a reliable, quality image, at a cost of R1 500 for the viewer. Digital equipment requires R4 000."
Jock Anderson, managing director of Multichoice’s signal distributor Orbicom, declared at the same conference,"The debate is not whether to go digital, but when...clearly, the world is going digital. Europe has decided to phase out analogue over ten years...if they could turn back the clock, Europeans would have chosen digital from the start. South Africa will have to conform to world standards in future by going digital. My thesis is: in that case, let us opt for digital from the start, rather than have people buy equipment that will be obsolete in future."
The SABC argued that the cost of digital does not match the South African consumer profile. This has not silenced Multichoice. Anderson seemed confident, "...In three years, the cost of digital will match that of analogue.. Keep in mind the cost curve we have witnessed with computers etc...furthermore, the problem of access is solved by local community viewing habits. Even in a Third World setting, digital has its place."
Decoding the encryption debate
Difference in encryption technology - the manner in which the image is scrambled in the case of both digital and analogue pay channels - serves to confuse South Africans further yet. ASEC, now defunct, had opted from the start for a unique Videocrypt encryption formula not compatible with that of the SABC, though both services would broadcast in analogue. This would have forced the consumer to choose between the two services, since each requires a different decoder.
But when ASEC fell by the wayside early this year, Multichoice leaped ahead of its only remaining competitor, the SABC, by releasing an integrated receiver-decoder (IRD) from the outset. The unit combines the receiving and unscrambling functions usually performed by two appliances. Multichoice’s pay-to-view DStv bouquet comprises 23 television and 48 audio channels. It offers the viewer an immense variety of international entertainment and information - at a cost.
The SABC prefers to cut off its share of the local market pie with a different knife. At the beginning of this year, it announced that its initial satellite transmissions would be free-to-air, not requiring a decoder. The two free channels would commence in July this year, followed by a pay-to-view bouquet (requiring a decoder) on 1 December. Promotional articles, such as the Satellite Magic supplement to Independent Media publications on 11 July, cheerfully announced that new M-Net decoders, using Irdeto encryption technology, could be suitable to decode AstraSat pay channels.
The cost of a brand new decoder, however, was kept painfully quiet. For a reason. Behind the scenes, AstraSat had not yet reached an official decision on encryption technology. By middle August, its general manager, David Niddrie, could not yet answer questions on encryption. "Hopefully (encryption) will be finalised by end August ...eventually, it is an SABC Board decision."
The ruined partnership
Astrasat’s confident advertising at the launch of its free channels failed to reveal uncertainty around encryption of future pay channels. AstraSat had, in fact, jumped the gun. It had been locked in lengthy negotiations to strike a subscriber management deal with Multichoice, involving use of M-Net’s Irdeto encryption technology. But Die Burger of 9 August alleged these talks had been derailed in early July, due to an agreement between Multichoice and Irdeto.
Details around the abandoned deal are shrouded in secrecy. Chief executive of AstraSat, Gert Claassen, says Multichoice had originally approached AstraSat with an offer of co-operation. He prefers not to comment on the reasons why the talks failed, stating these are sensitive and confidential. "All I can say is: Multichoice pulled out at the last minute." Claassen points out that AstraSat still has the option of employing Irdeto encryption (used by Multichoice) despite the botched talks. He expects AstraSat will reach a decision on encryption technology in the near future and hesitates to divulge a possible outcome."We will duly announce the outcome to the press."
Time will tell whether the impact of delayed encryption decisions will be detrimental to AstraSat. Both Claassen and Niddrie are confident that pay channels will commence on 1 December, even though decoders would have to be produced, distributed and stocked within only three months. From the retailers’ side, indications are it has already taken its toll.
Free fare
"From 15 July 1996 everybody will have access to television," proclaimed the Satellite Magic supplement.With great fanfare AstraSat’s first free-to-air channels duly beamed down on that day. Its initial bouquet includes the three terrestrial SABC channels, an entertainment channel called AstraPlus, and AstraSport, a sports channel. Though adverts claimed AstraSport would offer at least 11 hours of viewing, the channel was only broadcasting between 7pm and 11pm by middle August. AstraPlus is on air between 12.30pm and midnight, but no viewing schedules appear in the press.
The entry of AstraSat’s free fare has proceeded unremarkably, drawing little attention from South African viewers. According to chief executive Gert Claassen, 40 000 analogue receivers have entered the local market. This figure, however, is based on wholesale distribution. It does not reveal how many receivers have been bought by viewers. A spot survey among 10 Cape dealers reveals the public’s hesitancy to sample the goods. A Kraaifontein dealer says, "Customers are showing virtually no interest. I suspect it is because they don’t know what they’ll be getting in future; they’ll hang on until AstraSat finalises the encryption issue." A Cape Town dealer remarks, "City folk are hardly dazzled by the two new channels. The current deal is attractive only to those in rural areas who could never receive SABC."
A Stellenbosch dealer finds it difficult to sell a product embroiled in so much uncertainty. "At the launch of AstraSat in Cape Town, they were hardly able to answer our questions on the future pay-to-view options and cost of decoders. There is no comparison between digital and analogue sales. I honestly think AstraSat was launched long before they were even ready and organised."
Pie in the South African sky?
Despite a rocky and delayed start, Multichoice claims it now has in excess of 44 000 DStv subscribers. The bouquet of 23 television and 48 audio channels will be expanded in future. Initial research, spiced with a touch of optimism, estimated that 307 000 of the 1,2 million TV owners currently without pay television could afford the costs of satellite.
How viable is the satellite entertainment market in this country? If the demise of organisations linked to the budding satellite industry serves as an indication, prospects are less than rosy. In the words of Dave Cherry, Sentech executive and former chairman of the particularly quiet Satellite Association , "Everyone expected the business to be big, and hopped on the boat. Things just did not happen that way. Multichoice has penetrated a small, exclusive and finite sector of the local viewing market. The Satellite Association, established as a forum for service providers, is operating at a low key, sort of idling...at the moment I am keeping it alive single-handedly. Once SABC satellite broadcasts start, the industry may gain speed."
Now that SABC’s AstraSat has commenced transmission, the question remains whether the South African viewer market is ready - indeed big enough - to support both Multichoice and AstraSat. Says Gert Claassen, chief executive of AstraSat: "South Africa is moving toward multi-channel pay viewing. I believe there is enough living space for both of us." He says AstraSat has no intention of offering 25 to 30 channels, but will concentrate on compiling a "balanced and varied bouquet of eight channels, maybe more." The six pay-to-view AstraSat channels commencing on 1 December, will include movies, round-the-clock sport, news and music.
Claassen admits that Multichoice has had a head start in the marketplace. But he is not intimidated by it. "It is wrong to compare us to DStv. We are offering a completely different product. We saw a gap in the market which still exists." He admits to having an eye on current M-Net subscribers. "For R30 more (than M-Net subscription) we will be offering the viewer a whole lot more."
Claassen hopes local news content will give AstraSat the edge. "We have clinched deals with three foreign news agencies to use their video footage. However, the bulletins will be written and compiled locally, with local content added." Another selling point is the proposed Afrikaans pay channel, backed by a Boland Bank-led consortium. It will transmit four to six hours daily.
AstraSat feels its proposed package will appeal to the broader South African audience. It expects to gain 157 00 subscribers in the first year of pay television, and to have 660 000 subscribers after five years. Multichoice’s DStv, with its extensive selection of international entertainment and news, has recruited 44 000 homes to its ranks in nine months.
The last word
South Africa’s first year of space-age viewing has been a whirlwind one - sweeping thousands of viewers off their feet while leaving certain service providers gasping for air. No doubt the local audience is ready for a change from its regimented diet of ‘public broadcaster’ viewing. How may people are prepared to pay for a bit of variety, and what, exactly, do they want? Only once the industry settles in and gains consumers’ confidence will its viability become clear.
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