[By Duncan McLeod]

SA ’s pay-TV market is hotting up with news last week that the country will get its first satellite-based video-on-demand service on 1 September. VOD:TV plans to offer a “subscription and transactional” system that could give DStv a run for its money.

For years, pay-TV in SA has been dominated by one company, MultiChoice, with its DStv service. That changed last year with the introduction of the first competitor to DStv in the form of On Digital Media’s TopTV, which has signed up more than 200 000 customers in its first year of operation.

But, unlike the telecommunications industry, where competition has flourished in recent years, there has been a distinct lack of choice in broadcasting. There’s no doubt that TopTV has sharpened MultiChoice’s game. The latter has been working hard to improve its range of channels, offering services to customers in the lower living standards measures and launching more high-definition (HD) channels to serve the high end of the market.

But a duopoly does not a truly competitive market make. So, news last week of a new player in the TV market is welcome. VOD:TV is being launched by telecoms entrepreneur Oscar Dube through his company SouthTel Group. For “no more than” R200/month, subscribers will be able to receive HD and standard-definition content delivered to a personal video recorder (PVR).

But this isn’t traditional broadcasting. Rather, VOD:TV is introducing the country’s first video-on-demand subscription service, delivering updated content to the PVR on a weekly basis, including the latest movies and TV shows.

About half of the content will be viewable as part of the monthly subscription fee. The rest, which will include the latest Hollywood blockbusters before they are broadcast on traditional pay-TV networks, will be available for rent. Much like one would hire a DVD from a video store — but without the inconvenience of driving there — consumers will pay a small fee (perhaps up to R40) to unlock a movie for a few days.

Dube says VOD:TV is meant to complement rather than compete with DStv, but many consumers may consider this as an alternative. Certainly, those who don’t watch live sports — a market MultiChoice has sewn up — may find this an appealing option, provided VOD:TV can secure access to the best shows and movies.

Of course, MultiChoice isn’t sitting still. It’s strongly rumoured to be introducing a transactional video-on-demand service of its own — probably to be called Box Office — later this year.

VOD:TV is certainly talking the right game. It has signed content agreements with Hollywood’s six biggest studios and has secured investment from France’s Logiways, a spin-off of that country’s pay-TV giant, Canal+.

Dube explains that VOD:TV’s PVR, made by Germany’s TechnoTrend Görler, will be a converged device, allowing consumers to surf the Internet, watch YouTube videos, access Facebook and chat on instant messaging applications on their TVs. The box will have an Ethernet port to hook up a fixed-line broadband connection, and an active USB port so subscribers can plug in a 3G dongle from one of the mobile operators.

Interestingly, the box is upgradeable to digital terrestrial television. This means that when the country converts to digital — expected by the end of 2013 — the PVR will be able to receive and, more importantly, record the wide array of free-to-air channels that are expected to be on offer after the switchover.

VOD:TV thinks the market is big enough to sign up more than 5m subscribers within five to eight years. That sounds optimistic, but there’s little doubt that a video-on-demand player is going to make the competitive dynamics that much more interesting.