SABC financial challenges unsurprising

October 31, 2017

South African Broadcasting Corporation (SABC) has been issued with a strike notice by the Broadcasting, Electronic, Media & Allied Workers Union and the Communications Workers Union unless it can meet 10% increase to workers. This is hardly unexpected because of the protracted negotiations that are being fought on social media, blogs and mainstream media instead of boardroom where eventually a solution will be found. But where the problem lies in this case is the financial challenges South African state broadcaster faces and with no certain help in sight, days ahead are undoubtedly going to be tougher. SABC has failed to embrace digital innovation, the word that’s on every media company lips right now as organizations in the industry grapple with the realities of volatility, uncertainty, complexity and ambiguity in today’s somewhat turbulent market. Am not in anyway that innovation just happen by being more innovative or hiring creative types and putting them in special digital innovation departments. For innovation to happen, a considerable body of research shows that there are certain organisational conditions that must be tackled which in SABC case don’t exist. The days of South Africans gathering around the TV for appointment viewing are over, and the networks need to catch up to the televised revolution.SABC has been struggling for a long time and their biggest mistake was targeting the wrong audience. They seem to target the younger demographic, but the younger demographic’s not where the money is.Actively seeking an older demographic would have been much more idea, thats where the bulk of the population that watches traditional media.That younger demographic that SABC targets is not money. It’s not loyal either. It’s very transient. South African television audiences has splintered across a multitude of outlets, including online streaming, pay TV, dedicated websites, social media and YouTube, with SABC TV ratings declining as a result.Programs that used to pull a reasonable figure, reaching target audience rating points or whatever they call in South African television industry, they’re lucky to make double figures these days, according to data your blogger has. South Africans in 2013 watched an average of about 9 hours of SABC channels television.In 2016, figures showed it had substantially reduced to an average 1.8 hours in metropolitan areas and two hours in regional areas.That’s not including television streaming. Showmax and Netflix certainly hit the mark in 2015, and at the end of 2016 they were maintaining the market share which used to be SABC’s.And if we’re looking at future audiences, the bracket from 3 to 15 years old South Africans, they are arguably looking for user-generated content streamed online that is not through paid services, such as Instagram, Vimeo and YouTube. So whether the staff strikes or not, SABC problems are beyond the highly publicized financial challenges and are more of market driven.SABC broadcast TV has lost its wow factor in many South Africans household and the trend is seen across the country, as viewers switch towards online providers and tablet or mobile devices. Shows that once attracted several million viewers are now considered a success with half as many.

South African successful shows are now known as, event TV, so rare they have their own online presence on Twitter, Facebook etc.Viewers are still drawn to content but the way South Africans watch has changed dramatically and the power has shifted back towards the viewer. Most still watch live in big numbers but also timeshift, use catch up, watch online replays, use second screens and there are big numbers illegally downloading shows that are not fast-tracked.The pressure is on big broadcasters like SABC which is expected to endure its worst year in 2017. Outside of Football, ratings have been falling for broadcasters in South African and African countries as well.SABC is a victim of the beginning of a major historical shift from watching TV to watching video including TV shows and movies on the internet or on mobile devices.One the other hand, video streaming service Showmax and its competitor Netflix, which are aggressively doing a South African push, combined added more than half a million South Africa customers in the most recent data available.The future will be televised but how South Africans watch it and on what device remains uncertain but will not be through SABC existing platforms. SABC need to stop viewers deserting traditional live TV that it currently enjoys lion share.Even though there is more choice out there, South Africans are still watching free-to-air television but it won’t be for long. SABC’s audiences within the targeted demographic of 16 to 54 dropped further still in 2016 according to data available.They are the ones going to Showmax and Netflix, to pirated content, to internet streaming and sharing sites.They are the ones who will not wait until the SABC decide to put things to air. There is street joke in South Africa that say: ‘I don’t want to go home Friday at 8 to watch a program. I want to watch it any time I want.’ But entertainment and media industry reports forecasts likely below-inflation growth in ad revenue for SABC in the next five years. SABC channels are always glass half full and so they say free to air has got great growth offerings but they need to understand the challenge they are facing from competing products and platforms.There’s no doubt similar structural challenges have already confronted the music and print media industries in South Africa and across the globe. Now it is the turn of free-to-air television like SABC. That challenge will grow with the spread of the South Africa national broadband network, which promises faster downloads for consumers. SABC have to seek how to re-engage viewers with interactive and catch up services and more is needed to keep viewers tuned to the SABC channels on their big-screen TVs. The free to air offering is being fragmented and SABC is no exception and unless it can modify existing business models they are going to struggle and more strikes will definitely be common because revenues will not match wage bills.It is a high stakes fight that means more to the future of SABC TV than any single ratings season.

Contador Harrison