Mass-Market Media with StarNews Mobile's Guy Kamgaing
In this episode, we explore entertainment for mass-market consumers in Africa with Guy Kamgaing, the Founder and CEO of StarNews Mobile.
Throughout the series of episodes, we're exploring the entrepreneurs in start-ups digitizing informal and fragmented industries on the continent. And in the media space, that means building a product fit for the realities of mass-market consumers. In a world of abundant free content on YouTube, Instagram, Snapchat, and other "data guzzling" platforms, StarNews is building a business selling a la carte microcontent bundled with telco data, and they're selling it to millions of African consumers, while simultaneously helping creators make money off of their content, as well.
[04:05] - First question, what is StarNews' background story?
[06:52] - A deeper dive into the product, from both the content development and distribution perspectives.
[10:30] - Why would a consumer pay for content when so much free content is readily available elsewhere?
[15:47] - A discussion on StarNews' growth, and expansion from Côte d'Ivoire, across Francophone African countries, to South Africa.
[18:05] - On partnering with telcos.
[20:29] - How are the streaming wars between Netflix and Disney influencing strategy, and why is StarNews investing in content development?
This episode is part of our conversational series sponsored by MFS Africa. MFS Africa's competition is with cash, and throughout this series, we'll feature other startups and entrepreneurs who are digitizing, better organizing, and aggregating analog and fragmented industries.
Guy Kamgaing [00:11]: I was always thinking let's do content that's African, because I go back all the time, and I see a lot of content being produced, and people being broke. And that just didn't well resonate to me.
Justin Norman [00:22]: That's the founder and CEO of StarNews Mobile, Guy Kamgaing.
Guy Kamgaing [00:26]: Guy spelled Guy. Actually, my full name is Guy Kamgaing Kouam. Kouam being my Cameroonian name. I'm from Cameroon.
Justin Norman [00:34]: And StarNews Mobile is a startup selling and producing short-form video content that's distributed via telcos. The company launched first in Côte d'Ivoire, then Congo and Cameroon, before moving into its first English-speaking country, South Africa, late in 2020.
Guy Kamgaing [00:47]: So I said, well, what if I could take this great local content in Africa? The creativity is just unbelievable. What if I could take this video content and distribute it through African… so African and local content for local people, but do it with the telcos so I can also put in a monetization model.
Justin Norman [01:10]: In this series of episodes, we've been exploring the entrepreneurs and startups digitizing analog and fragmented industries. And in this episode, we want to expand our scope of exploration to include entertainment for mass-market consumers on the continent. In a world of abundant free content on YouTube, Instagram, Snapchat, and other platforms, StarNews is building a viable business selling a la carte, paid-for microcontent bundled with telco data, and they're selling it to millions of African consumers, while simultaneously helping creators make money off of their content as well.
Justin Norman [01:39]: Whereas for so many of our past interviewees, their competition is with cash, or with pen and paper, for StarNews, their competition is perhaps with newspapers or radio, or even with the lack of professional creators who are able to make a living off of their own content. So in this episode, Guy and I talk about StarNews' content development and distribution model, his experience selling value-added services through telcos, how to manage a B2B relationship with telcos, their strategy to launch first in Francophone African countries, and more.
Justin Norman [02:05]: Before we start, we'd like to thank MFS Africa for their sponsorship of the entirety of this conversational series. MFS Africa has the largest mobile money footprint on the continent. Their API hub connects over 200 million mobile wallets across nearly 30 African countries. This got us thinking about partnering with telcos, something that Guy and I talked a lot about in this episode, and that we know is something that can be a cause of frustration for smaller startups. It's something I've also talked to Adia Sowho about. She's sat on both sides of the table, first as the Director of Digital Business with a Nigerian telco, Etisalat, and later as the VP of Growth for the Credit-a- a-Service platform, Migo. Let's start with insights for those on the startup side of the table.
Adia Sowho [02:40]: There isn't a strong understanding of what leverage means on the startup side. I used to get a lot of startups show up and just say, "Well, I've got a great product. If only you would just send a text message to your $23 million, I'll be the next Zuckerberg." But then they would not be open to any feedback or any suggestions that said your product isn't what people will like. And then we'd just launch, and nothing would happen. And everybody would get frustrated and say, "Well, the telco does this, and the telco does that, the telco charges too much for revenue share," and so on and so forth.
Adia Sowho [03:08]: So, when you have a product with no users, and you show up and make demands on what you feel like you're supposed to earn, that's not a way to negotiate. So, I would tell people, "Look, sign the contract. It's only two years, right? And then at the end of two years, all you need to do is put me in a position where I have to adjust my commercials to respond to you. If you have traction, if you have a user base that's important to me, that is generating recurring revenue, I will adjust." And I gave examples frequently of people that had backed me into a corner. So I would invite startups to back me into said corner, but that, it didn't necessarily happen.
Justin Norman [03:44]: Later in the show, we'll hear more from Adia on what the telcos need to do better in these partnerships. Now, here's our conversation with Guy Kamgaing, the Founder and CEO of StarNews.
VO: You’re listening to The Flip, the podcast exploring contextually relevant stories from entrepreneurs around Africa.
Justin Norman [04:05]: Can we transition into how did the business get started? What were the sort of things that you were seeing, especially given your experience working with telcos, in particular, that led to you starting this business?
Guy Kamgaing [04:17]: It was a combination of a lot of things, but for the past 10 years I've been in what is traditionally called value-added services, the VAS business, with the telcos, so providing content and all kinds of related services to mobile subscribers through telcos. So I built relationships with Orange, MTN, Vodacom, telecoms throughout the continent. I was basically just doing content delivery services. I did really quite well. I was doing a lot of text-to-win campaigns, mega promos, anything that has to do SMS, jokes, horoscopes, I was behind a lot of those services. But after a while, I realized that a lot of times, I'm just grabbing content pieces, basically information from the internet, and delivering it to Africa. And it was like, "All right, cool. But you could do better than this."
Guy Kamgaing [05:20]: About 2012, 13, 14, Snapchat started to come on the scene. And I'm here in LA, I happen to know some people at Snapchat. And I realize video is definitely the way to go. So I kind of said, "Well, if I could anticipate this wave and get video into Africa, that would probably be interesting." And at the same time, the carriers, which I had great relationships with, they tell me, "Hey, we're going to deploy 4G, we're going to need rich media," blah, blah, blah. So I was like, "All right. Forget text. Let's go for video." The problem is, there was...
Guy Kamgaing [05:55]: And I was always thinking, "Let's do content that's African," because I go back to Africa all the time, and I see a lot of content being produced, and people being broke. And that just didn't resonate well to me. So I said, "Well, what if I could take this great local content in Africa?" The creativity is just unbelievable. So I said, "What if I could take this content, video content, and distribute it through African, so African and local content for local people, but do it with the telcos so I can also put in a monetization model," because I knew how to monetize content. I've been doing this for many years. So I knew what the price point was in terms of what people would be willing to pay for content. And I figured if I can create a platform for video content delivery, then I can ride a 10, 15 year window before anybody really realizes what's happening.
Justin Norman [06:52]: Let's get even deeper into the weeds in terms of, I guess, both content, content development, and distribution. How does all of it work? Let's start maybe on the content side. I know you're working with a lot of big influencers in a number of different African markets, but can you kind of break down a little bit more of how the content development part works first? And then we can talk about distribution afterwards.
Guy Kamgaing [07:15]: That's actually a good question because that's the toughest part. It's a least organized part, content in Africa. The production quality is not really always great. The flow is not always there. But again, I was thinking the Snapchat, Instagram model, right? I knew people were producing content. I knew they were doing it for other platforms, but these other platforms weren't able to monetize. So I said, "Okay, there is content out there. We just have to figure out a way to get it, bring the level of quality up, and distribute it."
Guy Kamgaing [07:50]: So I went to the influencers, because those are the guys who already have some content, and I said, "Look, guys, you're already producing content for all these platforms. Give me some of that content that you're producing anyway." So, it started off as just a short-form, and short-form was the way to go, because as you could see, if you do long-form content in Africa, data is too expensive, so it's really, really difficult to make money, or even to sell it.
Guy Kamgaing [08:14]: So I said, "Okay, from a content side, I know I can get short-form content from local influencers. And I can also invest into production of content with non-sophisticated influencers who just want to be out there on digital platforms." So, it started out with the influencers. It basically went from just your basic celebrity content on a flash drive, for example, or through WhatsApp, that we would then distribute, then started working with more traditional content production houses. And now we're investing into content, we're developing content, we're creating our own.
Justin Norman [08:51]: So, you gather all this content, then on the distribution side I know you have deep carrier relationships, and you bundle the services with data, for example. Can you just explain the mechanics behind how that works, and if I'm a consumer, what my options are?
Guy Kamgaing [09:07]: Yeah. Distribution was kind of the easier part, even though for most people that would be the toughest part, because of my existing relationships. So, instead of delivering, distributing text-based content, I was just distributing video-based content. So, I knew the price points, I knew how to bundle it. Like I said, I know how marketing works with the telco, I know when and what they're selling, so I was able to create packages within their data bundles, or even standalone packages for the consumer, at a price point of anywhere from three to five to 10 cents a day, where the money is taken out their airtime. That was something I was very familiar with on the monetization side. And on the distribution side as well, using data, including the package, or on the distribution side, not going through with an app. I knew how difficult it is to download apps in Africa, so we went away from the app model, and we created a web app instead.
Justin Norman [10:10]: So, I buy a video bundle. It gets taken... If we're talking about South Africa, for example, per video, is two Rand per day to access the channel. And then will I get an SMS with a link that I can click, and it's a web app, and I can watch? Out of this bundle that I purchased already, I can watch these videos?
Guy Kamgaing [10:28]: That's right, yeah.
Justin Norman [10:30]: I think the distribution model for me, it's interesting because it raises a few questions. The first one is this sort of natural global question... I'll say a Western question, which is like, "Why would somebody pay for a video when there is Snapchat, there is Instagram out there, and a lot of the creators are or were, still are creating content for those platforms as well?" I know you have an answer for why that doesn't work for a mass-market African consumer, but can you at least explain a little bit more from a consumer perspective, of why this model that you've implemented works better than these data heavy apps?
Guy Kamgaing [11:04]: The easiest answer would be to say, "Well, with your two Rand, data's included." If you go on Instagram, for example, it's a data guzzler. So with two Rand, you get pretty much nothing. Look, these platforms here were really created for unlimited data. It's very difficult to consume Instagram, Snapchat, Facebooks, all these guys on a limited data plan. You're going to be frustrated, you're going to run out of data every five minutes. So, because we have data included, it's in an interesting selling point.
Guy Kamgaing [11:37]: The second more interesting aspect is that... There's two more. From a content producer standpoint, they have an option. They can go on Snapchat, they can go on Instagram. But they're not making any money on these other platforms. So, this is a platform where with the two Rand, we split with them. So, obviously some content they will reserve for us, because they know, "Okay, I can give this content to people for free. But I can also make money, so why not do it?" So, there's also the drive from the actual content producers who are saying, "Look, I can make money." And now they're making money. It's not an idea anymore. Every month we're paying out significant amount of money compared to nothing. That's really the second driver.
Guy Kamgaing [12:23]: And the third driver from a consumer standpoint, the real experience of StarNews is not just about the content that you get, but it's about getting... For example, a concert I was talking about, we've giving away tickets to concerts. So, now you're part of an experience where you're not just seeing a video, but you also get a chance to win things. The chance to win is a very big draw in Africa, and we're actually rewarding people for being on StarNews. So, there's all these three elements that help us.
Justin Norman [12:54]: So, from a business model perspective... And that's the other thing in terms of a misconception. I would have said... I don't know. I mean, it's a two Rand bundle. Obviously you have... From a distribution perspective, there's low marginal costs, but then you have fixed costs in terms of the revenue share, both with the telco and with the content creator. So, if it's two Rand, you're taking, let's say, a third of that. I would have felt like taking a third of a very small data bundle is a challenging proposition, but is it that scale works it out? Or how does that work?
Guy Kamgaing [13:28]: Okay. Let's just say we have a million users who give us two Rand a day, right? What is that? That's two million Rand a day. That's 60 million Rand a month, right? So, 60 million Rand is $4 million a month on one million users. Even if I'm only keeping 10% of that, and everything else, goes to the carrier and the content producers... Let's say I'm just a platform, which is not the case, but I'm just a platform, right? That's $400,000. That's one million users. There's a potential for 600 million. That's what we're looking at. And then I haven't even introduced you all the different models we have on top of the two Rand a day.
Guy Kamgaing [14:05]: So, we have 10 Rand a week. But within the two Rand a day, we haven't introduced all these features, but we also have games, as in within you can win prizes. So, you've paid the two Rand, but you can also get a chance, if you pay an extra Rand or an extra five Rand a week, you can win a concert ticket, or you can win some airtime. And down the line, we're going to be doing more partnerships with brands to sell or offer more things. And we're going to start selling music, we're going to start selling more stuff.
Justin Norman [14:40]: Just thinking at the ecosystem level, if Instagram and Snapchat are data guzzlers and are not the apps for your average or the mass-market African consumer, then for StarNews, who is your competitor? What is your competition for like your consumer's time? Is it radio? Is it newspaper? Is it...? What are you competing with, in your opinion?
Guy Kamgaing [15:02]: That's a good question. I guess we're in a different space where... It's very difficult, because we're a mix of YouTube and short-form Netflix, and then to some level, a Patreon or a OnlyFans. So, I almost feel like we've created our own niche. And you would argue, "Why not YouTube? Why wouldn't they go on YouTube?" But some of the content they get on StarNews is not going to be on YouTube. "Okay. All right. So, why wouldn't they go to Instagram?" Well, because Instagram takes too much data. Or, "Why wouldn't they go on Netflix?" Well, same problem. It's too expensive. So, we've basically put ourselves in a corner where if there's competition, it's not clear cut that these guys are doing the same thing.
Justin Norman [15:47]: I'd love for you to talk a little bit about... If we can take a little bit, a step back, of the countries you're in, the sort of growth that you've seen in the five years as a business, how all of it has gone, but to sort of be now a revenue-generating business at scale.
Guy Kamgaing [16:02]: The idea was 2016, but we first went live end of 2017, early 2018. I would say really it's been two years, two and a half years. Just when we started, we started in Côte d'Ivoire, Ivory Coast, with one carrier. Then MTN came on board, so now we had two. Then we jumped into Congo, we had three. Then we jumped into Cameroon, we had four. And then the second carrier, MTN in Cameroon, now we had five. And last summer we went into South Africa, and now we have six. So it's just being one country after the next. Going into the country, getting the local content partnerships in place, getting the local integration, blah, blah, blah. And so, it's a lot of work. We have people on the ground in all these markets.
Justin Norman [16:50]: Was there any reason, or any insights, or any opportunities that compelled you to start in Francophone or French-speaking Africa? I'm just curious to know if there was any reason, other than maybe the fact that you're Cameroonian, that compelled you to start there.
Guy Kamgaing [17:05]: Well, that's a big reason. I was already there, so it was just an extension of business I was already doing. And to be perfectly honest, I knew I could dominate Francophone Africa. I wanted to build a business, I didn't know if I was ever going to raise money, because you never know with these things. So, it was important for me to be dominant in one place, and understand how the business runs, because I knew MTN is everywhere, so if I can do a good job, I can easily transition to any MTN market. In fact, that's how we got the Group deal. We were doing so well in Côte d'Ivoire, the group found out about it. But I knew I could dominate Francophone. And from francophone, I could expand into Anglophone, which is a bit more challenging. It's bigger. Nigeria alone, it's a game-changer. So, it was important to be dominant in one region, so even if I wasn't able to expand into Anglophone, just having Francophone would be enough for me.
Justin Norman [18:05]: Just as it relates to expansion, I'm curious to get a little bit deeper into the relationship with the telcos. You mentioned starting a relationship with MTN in one country, and then Group took interest, and I presume they're taking you into different markets at their discretion now, as well. So, do you have any insights as it relates to your dealings with telcos? Or are there any other lessons that you've learned in working with telcos in this regard?
Guy Kamgaing [18:32]: Telcos, a lot of people get intimidated by them. "MTN, Orange. Oh my God." They're big organizations, massive organizations, but if you understand their processes, how they work, and you know the people, they're fairly easy to work with. But you just have to have done it for 15 years, and very few people have done it for 15 years.
Guy Kamgaing [18:54]: The deals that we strike are really about... It's a revenue share. I know what to expect from them. There's no illusion. And I know what I have to bring to be successful with them. Sometimes they will ask me for exclusivity. I might give it to them for a couple of months on a particular channel or a particular piece of content. And it's actually, a remark would be interesting, to be part of these discussions of how to improve the mobile experience of their subscribers, because that's really what they care about, at the end of the day. Obviously, they’re making tons of money, but it's about, "Is this really good for my subscribers? Is this make sense?" Sometimes they'll come back and challenge me to say, "Hey, we don't like this channel," or, "Can you bring us this?" So, it's very collaborative.
Justin Norman [19:40]: They obviously like it, then also, apart from the customer user experience, it moves the needle for them from a revenue perspective, I'd have to imagine, or otherwise it wouldn't be worth their time to even try to do this and to put their resources behind it.
Guy Kamgaing [19:53]: Oh, yeah. If your service is wack, they're not going to give you the time of day. You need to have done your homework, not just on what you bring, but how to make it work. Because a lot of Europeans or whatever will come and say, "Hey, I have this great service. Push it," and it's a super huge data guzzler. And they'll be like, "Come back in two years." So you're going to go, "Oh, I hate working with MTN." What are you talking about? I'm not going to try to push something that I know the handsets cannot support, and you're not going to play a high definition type of service. That's not going to happen.
Justin Norman [20:29]: Yeah, absolutely. Switching gears just a little bit to talk about content and media businesses. I think it's really interesting what's happening in a global sense. I'm just going to share this to set up the question, but it doesn't necessarily apply to Africa as much. But Netflix was killing it in distribution, and then they had a lot of high costs from a licensing perspective on content, and so they went to do originals, and then Disney said, "We're going to pull everything off Netflix, and we're going to build our own distribution because we have all this IP." And so the opportunity or the challenge of owning distribution versus also owning the IP, and the second-order effects that that’s unlocked for Disney, which is maybe a separate conversation altogether. But I thought it was interesting how you mentioned distribution through the telcos is huge, but then you guys are doing some sort of original content and investing in content development as well.
Justin Norman [21:20]: So, I'm curious if the global conversation about content strategy has any impact, or is it just an obvious thing for you that you need more content and you're going to have to put more resources to it? Or is there other strategies or other insights that guide your decision or the strategies that you're pursuing, from a content development perspective in particular?
Guy Kamgaing [21:38]: Well, you're right to talk about Netflix and Disney+. The reason why we decided to invest into content is simply because nobody's fucking doing it. It's that simple. There's so much content that can be created out of Africa. There's so much. People are so creative. If you give somebody a Nokia, they can shoot a movie with that. People would do anything to talk about themselves, to talk about their culture, to talk about their history, talk about the family. It's just unbelievable. We were being pitched all these little different things that... And we realized it doesn't really cost a lot of money because we're a short-form platform. It's not like we have to produce Hollywood-type production with those budgets.
Guy Kamgaing [22:22]: And also, if we want to give local content Africans. If you look around, everybody's providing European content, even the telenovelas. If you go to Francophone Africa, you have so much content that's coming from overseas, but yet you know there's local content creators who are just dying to be able to live off their content. So, it was kind of like, "Well, if we're able to distribute and monetize, why not take a chance on the projection as well?" Because I know how to make money from the content I distribute, so I can support the content producers.
Guy Kamgaing [22:55]: That's the only reason why we're doing it. If I had content readily available, I wouldn't be in the content business, I would just in the distribution business. But unfortunately you've got to do what you've got to do.
Justin Norman [23:04]: Sounds like there's an opportunity for people to create short-form production agencies, and do the content development aggregation on your behalf, and then just sell to you guys.
Guy Kamgaing [23:14]: I would love that. If somebody could step up and tell me, "I can do it," I'll be like, "Okay, let's go."
Justin Norman [23:22]: Let's talk about the content actually. What's the sweet spot in terms of you mentioned it can't be HD, length of time. From a specific content production perspective, what works on StarNews?
Guy Kamgaing [23:36]: We have so much data. The interviews work well, celebrity interviews. What we'll do is we'll spend, say a day with a celebrity, or half a day, and we'll just conversation, conversation. And we cut it in five-minute segments, so a two-hour interview becomes 10 days worth of content.
Guy Kamgaing [23:55]: Recently, we've had some success with the comedy channel, local comedians. That's picking up a lot of traction. Cooking has been a big surprise. We're doing that with a company in Côte d'Ivoire. Of course, soccer, football. It really varies. Even from one operator to another, it could be different.
Justin Norman [24:15]: I like to ask some purposely broad questions towards the end. I'm curious to know in the context of all of this media and telco stuff that we're talking about, are there things you're trying to understand better and learn more about as it relates to global trends or whatever else?
Guy Kamgaing [24:32]: What I would like to see happen is I would like the world to understand Africa better. What I'm eager to see is how basically the media, the whole media content space reacts to the day when now if they want content from Africa, it's there, it's somewhere. And we're able to create a model where the content producers are making money from it. When you're in America, images of Africa always been the same for the past a hundred years, but that's also because there was nothing else to really show, or it wasn't the type of quality that you would expect from a local production warehouse. There's always going to be some European going to Africa, and bringing back his view of Africa through his own lens. I'd like to change the narrative. That's really what I want to see happen, be able to say, "Okay, well now we're really able to help people live off of their creativity and their talent, because they'll be able to make money from it." So, it could really be cool.
Justin Norman [25:45]: Thanks again to MFS Africa for their sponsorship of this episode. Earlier in the show, we heard from Adia Sowho, who shared some insights from her experience negotiating with startups while working at a telco. Now, let's go to the other side of the table from her experience on the startup side.
Adia Sowho [25:59]: On the other side, with the telcos, it's just flexibility, latitude, creating opportunities, as opposed to beating fists on a table and saying, "I am the telco, and you will do all that I say all the time." So, I think just being able to accommodate innovation is a challenge in companies that are very old. It's a challenge that is present in companies that have a business model that has seen some success, and to get companies that have a certain way to make money. Telcos sell things like voice, data, SMS. These are... It's like one product that touches everybody in the base.
Adia Sowho [26:35]: So, I think just some accommodation of working with siloed specialists that startups are, as opposed to mass-market products, which is what the telco typically releases itself. Although even that's changing because with price plans and so on and so forth, there's lots of micro product proliferation there. I definitely think there were just gaps and a major mismatch from both sides. So yeah, both sides have a lot to deal with and reconcile in order to have successful conversations.
Justin Norman [27:10]: That's it for this week's episode of The Flip. Next week, we talk to the CEO of a startup digitizing education for millions of learners across the continent. See you then.