{"id":168967,"date":"2016-06-21T13:30:28","date_gmt":"2016-06-21T11:30:28","guid":{"rendered":"http:\/\/mybroadband.co.za\/news\/?p=168967"},"modified":"2016-06-21T13:31:57","modified_gmt":"2016-06-21T11:31:57","slug":"how-showmax-decided-on-r99","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/broadcasting\/168967-how-showmax-decided-on-r99.html","title":{"rendered":"How ShowMax decided on R99"},"content":{"rendered":"<p><a href=\"http:\/\/mybroadband.co.za\/news\/broadband\/135730-showmax-broadband-requirements-pricing-and-supported-devices.html\"><strong>ShowMax launched its subscription video service<\/strong><\/a>\u00a0in South Africa on 19 August 2015, offering a range of movies and TV series to subscribers.<\/p>\n<p>One of ShowMax\u2019s biggest selling points was its price: R99 per month.<\/p>\n<p><a href=\"http:\/\/mybroadband.co.za\/news\/broadcasting\/136378-showmax-vs-netflix-vs-frontrow-vs-vidi-content-and-price-comparison.html\"><strong>ShowMax undercut its main local competitors<\/strong><\/a> at the time \u2013 MTN FrontRow (R149) and Vidi (R119) \u2013 and was also cheaper than Netflix.<\/p>\n<p>MyBroadband asked ShowMax spokesperson Richard Boorman how they decided on R99 per month for the service.<\/p>\n<h3 class=\"my-4\">Starting a video-on-demand business<\/h3>\n<p>Boorman said from a cash flow point of view, the initial price point chosen when starting a video-on-demand business is largely irrelevant. \u201cIt only becomes significant later on,\u201d said Boorman.<\/p>\n<p>VOD businesses typically require large up-front investment in things like back-end development, app development, and content rights.<\/p>\n<p>\u201cOn launch day you start with a big red number in your bank balance. As your customer base starts to grow only then can you start to eat into that deficit.&#8221;<\/p>\n<p>When one models this type of scenario, assuming it\u2019s going to be a number of years before the business turns cumulatively cash positive, the initial price point only has a small impact on the overall picture.<\/p>\n<h3 class=\"my-4\">Difficult to change the price later<\/h3>\n<p>Boorman said that while initial pricing is not critical, it\u2019s not easy to drastically change the price down the road.<\/p>\n<p>He said that small price changes, which may be caused by the weak rand, may not be liked, but are largely understood.<\/p>\n<p>\u201cHowever, suddenly tripling your price, on the other hand, obviously wouldn\u2019t go down so well.&#8221;<\/p>\n<h3 class=\"my-4\">Choosing R99 per month<\/h3>\n<p>With this in mind, ShowMax chose the price point based on the following factors:<\/p>\n<ul>\n<li>How does it position us with respect to competitors?<\/li>\n<li>How low can we go in order to make the product accessible to more people?<\/li>\n<li>At what point is the price so low that it can\u2019t sustain the content costs?<\/li>\n<\/ul>\n<p>\u201cWe believe that the addressable market is much larger than just the higher-LSM audience, which is why we\u2019ve invested engineering time into developing downloads with four different user-selectable file sizes, bandwidth capping options, and a cash payment voucher system.&#8221;<\/p>\n<p>\u201cAs the cost of smartphones, tablets, and data comes down, we want to make sure we\u2019re well positioned to get ShowMax into as many homes as possible.\u201d<\/p>\n<p>This thinking, said Boorman, had a big influence on the R99 price decision.<\/p>\n<h3 class=\"my-4\">More on ShowMax<\/h3>\n<p><a href=\"http:\/\/mybroadband.co.za\/news\/broadcasting\/168235-dstv-explora-getting-showmax.html\"><strong>DStv Explora getting ShowMax<\/strong><\/a><\/p>\n<p><a href=\"http:\/\/mybroadband.co.za\/news\/broadcasting\/164290-how-netflix-helped-showmax-in-south-africa.html\"><strong>How Netflix helped ShowMax in South Africa<\/strong><\/a><\/p>\n<p><a href=\"http:\/\/mybroadband.co.za\/news\/industrynews\/161056-7-reasons-to-sign-up-for-showmaxs-free-trial.html\"><strong>7 reasons to sign up for ShowMax\u2019s free trial<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>When ShowMax launched on 19 August 2015, it was the cheapest service in South Africa &#8211; here is why it chose R99 per month.<\/p>\n","protected":false},"author":23,"featured_media":135726,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24],"tags":[35,1167,32140],"class_list":["post-168967","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-broadcasting","tag-headline","tag-richard-boorman","tag-showmax"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/168967"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=168967"}],"version-history":[{"count":2,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/168967\/revisions"}],"predecessor-version":[{"id":168989,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/168967\/revisions\/168989"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/135726"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=168967"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=168967"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=168967"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}