As MTN zero-rates data for VOD here’s why other providers might follow suit

Something that we touched on in our previous podcast was the news that MTN South Africa, the mobile network operator, zero-rated the data access for MTN FrontRow. This is the operator’s Video On Demand (VOD) service which was launched in late December 2014.

This means that unlike other VOD Services, all subscribers to MTN FrontRow do not have to worry about the data cost attached to accessing content. All they have to pay for is the 119 Rand per month fee.

MTN FrontRow subscribers celebrated this as the second swing at competition made by MTN, after the FrontRow subscription was reduced from R179 to its current R119 a little over a month ago

From the context of South African VOD Services, this is another example of how competition will make VOD Services more affordable with  other aspects of the business model like the quality of content and its variety also improving.

It also reflects how VOD Services, in as much as they are not as widespread because of prerequisites like internet access, signify the next wave of intense competition in content consumption.

For the rest of Africa, this does, however, shine a light on the possibilities of heavily subsidized-to-free data access for VOD Services. One of the major challenges in figuring out the rollout of VOD has been the significant data costs that come with subscribers streaming their favourite shows like Breaking Bad or Game of Thrones.

It’s the one challenge that has led to iterations in VOD business models from players (no pun) like iROKO which has had a huge influence on African VOD startups and content strategy.

Granted, MTN might be saddling data costs as a burden necessary for market positioning and penetration. After all, Naspers threw its hat into the VOD ring with Showmax and mentioned plans to enable downloading of content because of data costs aligned to streaming. Then there’s the entrance of Chinese firm PCCW, as well as the impending arrival of Netflix which was a catalyst for all these changes in VOD.

But, there is an indication that you can make a compromise on data costs, provided, you own or control the pipe. In a sense, this is actually a demonstration of what could be expected from operators like Safaricom and Econet’s yet-to-be-launched ipidi and any other variation of it.

I’m not so naive to assume that Econet would do that with a VOD service in its first year. A cold approach to market pricing has always been in its DNA. But I believe if players like NetOne follow up on plans for content distribution via VOD, then a competitive market as and when VOD becomes a bigger deal locally, could have a lot of examples of product and price adjustment that could also include low to non-existent data charges.