Imagine the challenges of setting up a sophisticated DTH payTV operation in just 90 days! That was the task faced by Astra Platform Services (APS) earlier this year. Their client was TopTV, a new multichannel operator based in Johannesburg, and set up to rival the local incumbent and monopoly DTH player Multichoices DStv. In truth TopTV is looking not so much to challenge DStv head to head, but to create a new market in South Africa, targeting new viewers to DTH and a lower-priced bundle of channels.
The TopTV offering has, in reality, been a very long time in the planning. Vino Govender, CEO, explains that getting the South African operating licence from the regulator took 18 months longer than anticipated.
Helping the scheme along was satellite operator SES, which had taken a minority investment stake.
They stood by us throughout this period, through every hurdle and together with the other partners, we have now managed to get it off the ground. Let me be absolutely clear, it was an amazing feat. When you bring a project of this size together, you have the additional task of keeping shareholders interested, in our case for a period of four years.
From their point of view, it must have been like pulling teeth with them constantly asking, quite reasonably, when was this thing going to actually happen? Theyd allocated the funds, they were keen to see the investment start working and we could do nothing. Its also very time-consuming having to deal with these institutions. Quite rightly, they need to be informed every step of the way.
Govender and his teams hard work was made a little easier by deciding, quite early on in the scheme, to outsource as much as possible of the projects technical needs. Frans Lindeque was TopTVs CTO, and is now COO at the company.
We then spent some time assessing those proposals and APS was one of the various options on my plate. Our final decision was to go for the best of the best in terms of those offers. I told our CEO that it made sense for this best of the best selection because at the end of the day, the proportional cost of that decision was very modest in comparison to the overall task involved. We agreed that we would not cut corners on the technology.
What I can now tell you is that we have definitely got the best of the best. Everything we have here is the latest technology available, its the latest compression technology, its the latest in satellite modulation, the latest IT systems. Were transmitting MPEG 4 in its H.264 and using DVB-S2 and the latest audio compression to further maximise spectrum efficiency. There is nothing later than this available.
Now the plant is in Durban and boxes are rolling off the line at about 10,000 a week. So in that regard, UEC has performed superbly. They are tiny boxes and it is lovely, inexpensive, small and very quick to respond. Now we are looking at a PVR, we have to. We have access to NDSs xTV technology and their road map and thinking in that area. In fact, part of the overall concept was to select suppliers who were prepared to work with us as technology partners and this was especially true of APS. They have walked the extra mile with us. As far as the broadcasting chain is concerned, TopTV is also making global history. Perhaps the whole 90-day set-up operation qualifies as a world record, suggests Lindequ.
We are using an SES satellite and currently taking three transponders from them but thanks to MPEG 4 and DVB-S2, it means the capacity is incredible. The uplinking is done from APS at Munich. Then we will have our secondary uplink, our back up, in Nuremberg. But we are proud that we are the very first broadcaster, the very first pay-TV broadcaster, to be uplinking in Ka-band. We think this is a major, major achievement. Only the military have done this up until now and for contribution links, but not for broadcasting. The satellite then converts the incoming signal to Ku-band for transmission to our area.
We can now handle more than 3,000 installations a day. We can now handle 200,000 interactions a month by way of telephone calls, text messages etc. In other words, we are now well equipped at the beginning of the sales season to handle whatever the market demands. We simply did not expect to be that successful so quickly. We planned for 2,500 calls a day but unfortunately there were coming in at 1,000 an hour. The plan allowed for 10,000 or so boxes [to be supplied] per month. This created a headache for marketing and we quickly had to issue apologies with advertisements in newspapers.
Vino Govender takes up the story... We certainly launched successfully, but when we start breaking even from a cashflow point of view, then Ill be happy to claim a degree of success. But launching successfully in such a short period of time was an amazing feat for all concerned. Given the time constraints that we have had to work under, we have essentially put up a pay-tv operation in three months. And this, I am convinced, is a worlds first. Ive never seen anything done as quickly anywhere else. We were overwhelmed by the initial response following our launch. We have shipped 115,000 boxes into retail and we have activated just over 50 percent of that.
His comment prompted an instant question as to why the slowness in activating boxes. First, we had a bottleneck in the installer base, there werent enough installers and, remember, they are also serving MultiChoice, so that skill is thinly spread.
What we have done is to start a series of projects throughout the country training new installers, giving them the necessary equipment, such as field- strength meters to get them off the ground. For example, when we launched on May 1st, we had only about 250 installers that were trained and ready to take our product to market. Today we have about 1,200 and each of these installers consist of two teams so we can now manage about 2,400 to 3,000 installations per day. This boosts our capacity to serve the market tremendously.
The other issue was our retail position on launch. The time available to us to get into the market was most limited. We had to get the message out there and build awareness but the physical distribution of boxes into retail stores was also a challenge and weve grown that from 1,500 locations to almost 2,500. So today there are about 1,000 additional retail points where you can get information and buy our equipment. Our current phase which we are busy working on now will take us to 4,000 stores and this should give us a position on every major retail point in the country.
September 1st saw TopTV initiate its Spring Special (see separate panel) on South Africas first day of Spring. In this country, Christmas time is when most large retail items are bought, whether its fridges or TV sets, Christmas is a big sale period, says Govender. We are anticipating a large update in the sales of units in the build up towards the holiday season. This year is obviously a little different for South Africa the World Cup had a major impact here and might well have eroded a great deal of retail spend. People undoubtedly spent time entertaining themselves and their friends and family during the complete World Cup and for us the months of June and July, when the soccer games were on, were relatively poor for us, but we are definitely coming out of that now. July saw us averaging about 300 installs a day but we are now at the 500-600 level and our target is to quickly reach 1,500 installs a day. We would hope to see that number reached during the summer months.
Govender explains that 200,000 is a magic number for the broadcaster. It rather depends on how people perceive break even. For me, break even is very straightforward: If I start selling a box into the market today, how many box sales do I need to pay for all of my costs? And that number is about 205,000, roughly. I believe we are leading the market. DSTV has definitely woken up but we are not going to stand still. We just do things differently. If one compares the two businesses, it is fair to say they are mammoths, they are huge, they have 4Bn Rand on call, they have a war chest. Our marketing spend is miniscule compared to theirs but one of the reasons we are able to do what we do is because we think out of the box.
We do not do things in the traditional payTV way, we do things differently, we work harder, we work smarter, we do not use third-party agents and consultants, we know our market and our industry best and we do not need consultants to tell us what we already know. This philosophy has made a huge difference, which we estimate as being a 200-300 Million Rand difference. It is about getting out in the market, rolling up our sleeves and getting on with the job. This is what its all about.