The massive opportunities that digital media offers are still largely untapped in South Africa and its neighbouring countries, with both consumers and suppliers still ignorant of the potential for these technologies.
According to an upcoming BMI-TechKnowledge Emerging Digital Media report, there is still a marked lack of consumer awareness of digital media offerings – and this applies to providers as well.
Contributing to the supply-side problem is the complexity of offering downloadable media on a mobile phone, with the interface, standards and costs of research all stumbling blocks as well.
In addition, the skills shortage is South Africa and the brain drain all add to the problem.
"The market is often misunderstood by distributors and operators, making the cooperation between different companies in the value chain difficult," says Astrid Hamilton, author of the report.
“Consumers too have not yet made the full mind shift to a digital lifestyle and the market has not yet moved from the early adopter phase into the mainstream. The generation of awareness is key in getting the mass market to buy into the digital lifestyle.”
Sheldon Neilson, a BMI-T analyst and co-authour of the report, adds: “Digital media is movable by nature. The convergence of devices, their interoperability and the seamless transfer of data between them provides for a technological platform with limitless bounds and exciting content potential for consumers, and with the development of the Digital Living Network Alliance (DLNA) standard, users will be able to move any media including pictures, videos, movies and music between devices with an improved level of compatibility.”
As fledgling service providers begin to surface, co-opetition is likely to manifest in the marketplace.
“Players will both co-operate with each other when it suits them, as well as compete with each other under different circumstances due to the relatively small size of the emerging market and also the fact that a single company cannot yet provide all the services that users will require,” Hamilton says.
Emerging revenue models include rentals, pay-per-use, new subscription models and advertising-supported services in which users can watch/listen to something for free if they watch an advert first.
The question is just which models will work in which environments. Advertising is changing and providers must know how best to use the new advertising channels to their benefit. Mobile and online advertising is still very much in flux and regular advertising methods, where homogenous advertisements are created for mass-market appeal will not work as well in this space. Interacting with customers is also important; it makes them feel valued and provides us with valuable information and ideas.
Starbucks recently launched a web2.0 customer relations concept, mystarbucksidea.com for consumer comments and ideas which has taken the blogoshpere by storm.
“This was arguably first seen in the public domain when Dell launched their IdeaStorm website, (also powered by Salesforce Idea) where customers were able to submit and share their feature and product suggestions which ultimately resulted in a Linux box being produced, a dramatic shift in direction considering their long term relationship with Microsoft,” adds Neilson,. “Regular patrons are able to post their suggestions, read, comment on, and rate others’ and ultimately, those with the greatest ratings will be implemented in-store.”
The concept of service personalisation and interaction will continue to be one of the greatest trends in 2008 and beyond. Social media and social networking are still on a major upward trend, but are starting to mature as businesses are beginning to understand how best to tap this market. The growth of this sector will continue, perhaps no longer as dramatically but rather more steadily, for some time.
“One of the primary drivers of emerging digital media is pure consumer demand. The more consumers are exposed to and the more educated they become, the more they want and this pull model is driving innovation and sales,” says Hamilton. "Other drivers include affordability, personalized, interactive and often user-created content,and the bundling of complementary services and products across a number of platforms."
The cost of high-end technology, however, remains an inhibitor in emerging economies as does the proliferation of the necessary signal coverage, such as DVB-H signal for mobile TV, 3G coverage for video and audio streaming, Wi-fi (and soon, WiMax) coverage for internet access and available fibre or copper cables for IPTV, VOD and broadband.
The regulatory environment, if local loop unbundling, new licenses, digital migration and spectrum availability take too long to be processed, can also significantly inhibit the growth of the market.
“The high investment required to compete in some of the EDM sectors, such as pay-TV and mobile TV, and the exclusive contracts already signed by the pay TV incumbent MultiChoice are barriers to entry and represent an inhibitor to increased competition.” says Hamilton.
“New pay-TV licencees, such as the stumbling Telkom Media will begin broadcasting in the second-half of 2008. Initially this will not make a huge impact on the market, although the effects may be felt in 2009."