Editorial | Dec 04,2021
Stories about business ventures that have been suffering from the consequences of rising inflation, shortages in foreign currency, restrictive government policies, the slowed economy due to the Novel Coronavirus (COVID-19) pandemic, and political instability have become ordinary in these trying times. Though a couple of the phenomena mentioned above might also apply to Trios Movie Centre, this particular business is losing out mostly because of the rapidity with which internet use is growing and technology is evolving, an ironic situation when one considers that this was the factor behind its establishment and earlier success.
"Considering how the business struggled to cover our monthly expenses, it looks like this is the last time I am going to pay the rent for my movie shop," said Binyam Habtamu, one of the owners of Trios Movie Centre, which was established as an internet cafe eight years ago by three brothers and later shifted to selling movies to customers by uploading them to flash drives due to a growing demand for Western films.
"We provide anything from series, feature movies, reality shows, documentaries, to audiobooks and educational books," Binyam told Fortune. Things went well for them. The rental business, which had started out with a 60,000 Br loan from Addis Credit and Saving S.C., a microfinance institution, opened another branch in the second year of operation. Currently, Trios operates four branches across Addis Abeba and is still being run by the brothers and their sister, Rahel Habtamu.
The owners pay between 6,000 Br and 8,000 Br a month in rent for each of their locations, an amount that presented no great difficulty in the past. Now, things are looking a little grim for the family business as many of their customers begin to turn to the internet and streaming services for their movies and entertainment.
In this fast-changing world, it is inevitable that old technologies become obsolete and make way for new developments and, likewise, the film and music industry has been witness to tremendous medium and market changes as a result of technological shifts.
The movie-rental industry is far from new in Ethiopia. A couple of decades ago, there were shops all over the capital renting out movies on VHS cassette tapes. The VHS tapes were slowly replaced by DVDs and VCDs in the early and mid-2000s, which in turn were edged out by places like Trios that offered a more convenient method for movie-lovers to get their fix. Namely, in the way of digital files on a tiny flash drive, which customers do not have to worry about returning.
Trios used to make 1,000 Br a day on average, according to Binyam, and its income reached as high as 5,000 Br a day last year when businesses and schools were closed down due to the COVID-19 pandemic, a situation which has led to a contraction of Ethiopia's GDP growth from an earlier projection of nine to six percent despite bringing along opportunities for some. Internet shutdowns also often led to a spike in business as people did not have other means to entertain themselves with, Binyam observes.
"Now the income at each branch has reduced and sometimes goes as low as 300 Br a day," he lamented. Binyam believes, quite rightly, that cheaper internet access and proliferating movie streaming services are the cause of his woes. There were 3.6 million internet users in 2013, and by the end of 2020, the figure stood at 23.5 million, according to Ethio telecom.
Trios Movie Centre has 30 terabytes of movies and employs up to four people at every branch, also providing the occasional gig to freelancers. Regardless of its vast library, it seems that with the advent of streaming and improved access to high-speed internet, Trios and other businesses like it are faced with much the same fate that met the VHS and DVD rental market in the not-so-distant past.
This story is not new, and the owners of businesses like Trios might be interested in taking a look at how a similar cycle played out in the US just over a decade ago. Netflix, an American company that had started out as a DVD rental service in 1997, made the move to begin a subscription streaming platform in 2007. The pioneering company now streams and produces its own TV shows, movies and documentaries in more than 30 languages and 190 countries. It has 204 million subscribers worldwide and generated 24.99 billion dollars last year.
"When this [rental] business first started in Ethiopia, it was driving cinemas out of business now their turn has come and they're being replaced by streaming services," said Markos Lemma, co-founder, and CEO of Iceaddis, an innovation hub & tech startup incubator. According to Markos, it was clear that an unsustainable business like selling movies on flash drives would not last. Binyam concurs.
"We started the business knowing that it'll phase out eventually," he told Fortune.
While there is no payment system set up to subscribes directly from Ethiopia, people use Netflix accounts opened in other countries. However, there are people here and there that sell Netflix accounts for payment. On platforms like Telegram, for example, one can find passwords to Netflix accounts sold for as little as 250 Br a month, according to users.
That is not the only streaming service that is available to Ethiopians now. Some have taken heed of Netflix's success, and a similar trend is playing out in the country as new music and film streaming services providers start to emerge. Some sites in the movie market are Sodere, Avetol, and habeshaview.
Habeshaview aims to take the Ethiopian movie experience to the internet and change it into a profitable business. According to Tigist Kebede, operational director of the streaming company, it was established in 2015 to connect diaspora communities around the world, which are estimated to be three million, mostly concentrated in North America, Europe, and the Middle East.
One of the challenges in the business was and still is convincing subscribers to pay a subscription fee to watch Ethiopian films, according to her.
"International acceptance of Ethiopian movies is still quite low and it is hard for habeshaview to get quality and original content written, directed and produced by Ethiopians," said Tigst, whose company charges 73 euro per year for a subscription.
However, the company's subscription rate is growing, with most of their clients located in North America and Europe. The same is true for the number of people using Netflix, including Muaz Sufien, a movie enthusiast who has been purchasing movies from a movie centre for the better part of a decade.
Muaz has turned to other means for sourcing his entertainment. He now downloads movies from the internet and uses a Netflix account opened in the United States to stream series of his taste. This came about when he installed WiFi for 500 Br a month at his home following the discount that was made on the service.
"For the last two years, with the exception of times when there were internet shutdowns, I haven't been buying movies from movie centres," Muaz told Fortune. Prices are normally around one Birr for an episode of a series, two or three Birr for feature movies, and five Birr for documentaries and Ethiopian movies.
"I now instead put the money towards paying the internet service charge," he says. "I prefer streaming because I can enjoy it from the comfort of my home."
Of course, many also take advantage of the plethora of online sites that offer free, pirated films.
Movies are not the only thing shifting to new channels. Similar services and applications for music have begun to sprout up in the country. Awtar, ArifZefen, Bana Muzika, and Shekla are some of these recently-established mobile applications that customers can use to buy, download or stream music online.
Awtar Multimedia, the first mobile music application in Ethiopia, was first launched in May 2019. This application has made accessing and purchasing Ethiopian music possible directly through a mobile phone.
Awtar has partnered with Ethio telecom to allow customers to pay for their music directly through airtime credit. Earlier this year, it also opened up to the international audience by accepting payments through Visa and MasterCard. Once a client purchases music, it gets registered to their SIM card, which ensures accessibility of music from any capable device as long as the SIM card is in use. Subscribers use mobile top-up to purchase music and pay three Birr for a track and 15 Br for an album.
Ethio telecom gets a cut of 30pc on every purchase while the musicians receive just over half of the remaining amount. Awtar is currently in negotiations with the telecom operator to adjust the size of its cut to 10pc, according to Yohaness Bekele a.k.a. Jonny Ragga, musician and one of the founders of Awtar. The application's user base has been growing steadily in its two years of operation.
"When the application was launched we had 20,000 users, now this has grown to 100,000 and by the end of this year, we plan to reach one million," said Yohaness.
The application has made it very easy to track data, according to the singer. In addition, it notifies its more than 900 musicians whenever they sell their music.
There is also a growing number of individuals who used to buy music from street vendors or download music from sites that infringe copyrights that have now shifted to purchasing music on streaming apps like Awtar.
"A music purchasing application was a long time coming in the Ethiopian market and we have now come to appreciate the real value of the musicians' creations," said Negash Abebe, who first came in contact with the application five months ago. "I find it convenient because everything is accessible on my phone.
Meanwhile, businesses that are being driven away from the music and movie industry are familiar with the field and know the demand; they can still be useful in navigating through the market and work as agents, promoters, and the like, according to Markos, the expert. However, it seems that Binyam has already decided to leave the industry altogether, choosing to try his luck in pastures new.
"I've now opened up a printing and advertising company and shifted my business in that direction," he told Fortune.
PUBLISHED ON Apr 30,2021 [ VOL 22 , NO 1096]
Editorial | Dec 04,2021
Agenda | Apr 22,2022
Fortune News | Oct 22,2022
Agenda | Apr 30,2022
Agenda | Jun 25,2022
Commentaries | Jul 24,2021
Featured | Jan 05,2019
Commentaries | Jan 18,2019
Viewpoints | Feb 06,2021
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