Game of Thrones: Kenyan Media Edition

The digital migration deadline has continually been postponed by the government, and the reason cited is that most people have not yet equipped themselves with the necessary hardware for this move to be feasible. While this may be true, when you look at who has been most vocal about halting the move, you find that it has been the three incumbent TV stations, KTN, NTV and Citizen who have been at the forefront of court appeals to have the deadline postponed. Are they just doing this for the good of their viewers? I think not. In this piece I shall unveil to you what I suspect has been going on behind the scenes of this most epic game of thrones.

According to research, TV provides the most valuable form of advertising, up there with the likes of Google in its effectiveness. Why is this so? First and foremost, TV is the most engaging form of media around. It is not rare to have professional people with heavy spending power waste hours every day catching up on their favourite TV shows. This captive audience, along with the ability to fully tell a brand’s story through compelling images, audio and video, makes for the ultimate marketing package. Owning a TV station means real media power, and the ad dollars will therefore flow gratituously. Being the biggest in TV, means owning the media throne.

(Nation Media Group CEO Linus Gitahi)

Further to the evident power of television, the current state of analogue TV stations has meant that starting a station is a prohibitively expensive endeavour. You need billions of shillings just to lay the groundwork for an analogue TV station. You must set up your own masts and infrastructure, which blocks many an entrepreneur from even thinking of going into this area. So far, only KTN, NTV and Citizen(Royal Media) have been able to break the analogue TV mold in any sort of profitable way. Backed by billions of shillings from the Nairobi Stock Exchange and other private investors, these three stations are the only ones so far that have been able to amass the right blend of premium content and massive audiences that advertisers crave. This has translated into billions of shillings in revenue over the years. Now it doesn’t look so philanthropic when you see these three stations fighting to keep away the digital migration deadline, does it?

(Standard Group CEO Sam Shollei)

You see, the truth is that digital signals will significantly lower the cost of setting up a TV station. Where before you had to set up your own expensive masts and infrastructure for billions of shillings, now you will have central providers like Startimes and GoTV, who, in laymans terms, will be connected to a cheap, central satellite, and all you’ll have to do to set up a station of your own, is pay a small fee to the decoder providers, and you’re in business! This disruption of the status quo is not good news for the current incumbents. It is now clear that we will see a situation similar to radio, where everyone and their grandmother has set up a radio station because of the relative ease and low capital spend. The proliferation of TV stations will almost certainly break up the current monopoly, and the big three will have to bear the huge risk that one of them might become irrelevant after the wave of new stations hits. Thing is though, no one knows who exactly will lose, and none of the big three want to roll that dice. That is why, I think, they block the digital migration.

(Royal Media Founder, SK Macharia)

What trends in other media sectors have shown though, is that winner of the digital age will be the one who sets up the largest network. Just like Royal Media rules radio with their 8 tribal stations(out of a total of 120 radio stations in Kenya). Of the current TV stations, who is best poised to enter into this brave new world? Nation and Citizen have shown experience in setting up their own networks. Citizen(Royal Media) have an ultra-successful tribal radio network, while Nation Media Group’s network of newspapers such as Daily Nation, Business Daily and the East African are all authorities in their niches, so I think they can use this experience to set up a new TV network. The one who is in the most danger is KTN, owned by Standard Group, who so far have shown no prior ability whatsoever to set up a network.

The ultimate winner though, will be the vendors of the decoders(Startimes, Zuku, GoTV), for as they say, in every gold rush, the ones who make the money are the ones selling the shovels.