More trouble for Zuku as watchdog impounds equipment in content row

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Zuku CEO Richard Bell

The copyright watchdog has impounded equipment owned by pay-TV operator Zuku for illegal distribution of content as two Indian companies pressed charges against the firm for supply of their programmes.
Kenya Copyright Board (Kecobo) on Monday, with the help from  the police, raided Zuku control room in Mombasa and confiscated equipment suspected to be used to rebroadcast cricket matches owned by two Indian firms.
Yesterday, Antony Njugu an advocate with Daly and Figgis confirmed said that his clients India Premier League and the Board of Control for Cricket in India (BCCI), had asked the law firm to commence legal action against Wananchi Group the owner of Zuku.

“We have been asked by our clients to commence legal action. The matter has not yet gone to court, but we are looking into it and will soon be filing it,” said Mr. Njogu.  Marisella Ouma, the executive director of Kecobo, said the confiscated equipment which included a decoder and smart card were allegedly being used for the rebroadcast of the content without authorization.
“Despite a number of previous cease and desist letters being written to the pay-TV company by the authorized broadcasting organization and the BCCI, the pay-TV firm has continued to unlawfully redistribute, the Indian Premier League cricket matches to its subscribers, initially in  Nairobi and until today, in Mombasa” Kecobo said in a statement on its website.  Attempts by Business daily to reach wananchi Group CEOP, Richard Bell for comment on the allegation we unsuccessful by the time of going to press.

The action by kecobo comes at a time when Zuku which provides its programs through satellite and cable has intensified its efforts to acquire content to wrestle the market leader DSTV by partnering up with local football and rugby clubs.

The two new entrants, zuku and starTime, have been unable to shake Dstv’s dominance especially in the premium market that Multichoice serves with exclusive content like the English Premier League. Recently Zuku increased its monthly fees by an average of 20 percent to lift its sales, a move that has dimmed hop of lower pay-TV rates.(Business Daily)
Zuku is long on fiction and jaguar car insurance quote short on TV content

A recent article in Standard titled “Where is the big bad wolf?” attempted to separate the wheat and the chaff in regard to present false accusations in the Pay TV sector. In a press conference seemingly orchestrated to portray Zuku as an underdog under siege from a mighty juggernaut—read DStv—Mr Bell called on Communication Commission of Kenya to rein in MultiChoice, the owners of Dstv.

In as far attempts at misinformation go, the Wananchi Group’s, Chief Executive Richard Bell’s shot at it is at best flimsy and at worst ridiculous when he tries to paint MultiChoice as engaging in anti-competitive practices.

Zuku’s vilification of DStv has been almost defeatist and an inadvertent admission that it lacks popular and unique content, with Mr Bell saying DStv should be coaxed by law to share its exclusive sports content, such as the English Premier League (EPL) TV rights, with other Pay Tv providers to level the playing field.

This is utter buffoonery at best. It’s almost akin to D.T Dobie asking the Government to rein in Toyota Kenya and allow D.T Dobbie to also import Toyota’s because majority of the Kenyan populace prefer Toyota to other motor vehicles. Pay Tv operators the world over acquire exclusive content through a competitive bidding process making EPL rights expensive to acquire.

For instance, Multichoice has in the past lost the rights bid for the EPL to the defunct GTV through competitive bidding, thus any accusation of unfair access to this content to the exclusion of competitors falls flat on its face. When DSTV lost the EPL bid to GTV, it did not orchestrate a smear campaign against GTV; instead, it restructured its bouquets channels to meet the entertainment needs of diverse consumers.

Indeed, here in Kenya, a local station, KISS Tv has managed to buy rights to air select EPL matches on Saturdays. The business model dictates Pay-TV companies can only attract subscribers, who have the option of watching free-to-air television, by offering unique content from that aired by their competitor.

Only by investing in exclusive rights to unique content can a Pay TV provider convince potential customers—who already have access to free TV channels—to part with a monthly subscription fee.

The European Commission through its competition commission has recognised that exclusive rights to broadcast sporting events is an acceptable commercial practice. A Deloitte study on competition, commissioned by the CCK, echoed this stance.

The Deloitte report noted that “If some subscribers choose Pay TV provider on the basis of availability of particular sports content, those customers would be harder for competitors to tap into as key sports content is sold on an exclusive basis.”

If Zuku is keen on providing its subscriber base with EPL matches, it should bid for the same like other players in the Pay Tv market do, instead of crying wolf. Alternatively, if it is a fish that can’t roam with the Pay TV lions on dry land, then let it stick to offering internet services and telephony.

MultiChoice is a pioneer of Pay Tv in Africa with an unmatched track record of over two decades of investment in the continent. Undoubtedly, MultiChoice has an unparalleled history of investing in the local film and production industries in Africa.

Zuku should have cut its teeth in the internet service business before going against MultiChoice who have years of specialised industry knowledge. Lack of business acumen is not a regulatory issue; Wananchi Group should have known better and armed itself with content before venturing into the Pay TV business.

Zuku’s sustained affront on MultiChoice is based on a read ocean strategy that is focused on annexing DStv’s market share by any means necessary, as opposed to creating uncontested market share and creating new demand.

A testament to this is the Kenya Copyright Board’s (KeCoBo) recent impounding of equipment used by Zuku to illegally redistribute exclusive content on its cable television platform. In industry lingo, the illegal Zuku act is also known as grey market re-broadcasting piracy. Grey market piracy is where one trades a commodity through parallel and unauthorized distribution channels.

KeCoBo officers who acted on a tip off, mounted a sting operation on an alleged Zuku Control Room along LuharWadhastreet in Tononoka, Mombasa and confiscated equipment suspected to be used to illegally rebroadcast exclusive content without authorization.

Despite numerous and prior cease and desist warnings from KeCoBo and the Board of Control for Cricket in India (BCCI), the Pay TV company had been unlawfully redistributing, the Indian Premier League (IPL) cricket matches  to its unsuspectingsubscribers, initially in Nairobi and then in Mombasa.

Indeed, KeCoBo notified the public that SuperSport is the sole and exclusive holder of IPL broadcast rights in the territory of sub-saharan Africa and adjacent islands, including the territory of Kenya.

Thus, Zuku’s broadcast of the IPL in the territory of Kenya is unlawful and infringes the BCCI’s rights and the rights of the BCCI’s official broadcasters and authorized licensees.

KeCoBo was forced to act to ensure that Zuku immediately ceases and permanently desists from its illegal and infringing conduct.

The irony of Zuku’s obsession with the piece of the pie that is already in DStv’s hands is that a recent competition study on the broadcasting industry in Kenya by Deloitte indicates that there’s a larger piece of untapped demand-pie.

“There appears to be significant scope for the size of the Pay TV market to grow, and accordingly for new entrants to expand their market share without necessarily competing for existing subscribers,” Deloitte. (TECHMORAN)

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