The digital broadcasting transition in Kenya is set to ignite fierce competition in the local pay-TV market. Smart TV, a Swedish company owned by Next Generation Broadcasting (NGB), has partnered with Kenya Broadcasting Corporation (KBC), a state-owned free-to-air TV channel, to provide set-top boxes for the analog-to-digital migration. However, the competitive atmosphere has intensified with local TV stations filing a court case challenging Smart TV's collaboration with KBC. This legal battle has undeniably impacted Smart TV's anticipated business success.

Despite its aim to offer more affordable pay-TV subscriptions and challenge DStv's dominance, Smart TV is facing unexpected hurdles. The media owners' association has filed a court case questioning Smart TV's content and alleging "unfair favor" from KBC. While Smart TV's set-top boxes come with a one-month subscription to their pay-TV channels in addition to local free-to-air channels, the company's reputation has been affected by the ongoing court proceedings.

Kenya is expected to complete the transition from analog to digital broadcasting by 2012, a target it set ahead of the global deadline of 2015. Smart TV will operate on the digital platform implemented by the Kenyan government, following successful frequency testing. Households with older CRT TV sets will require a set-top box to receive digital transmissions on their televisions. Dan Kagwe, the group CEO, emphasized Smart TV's commitment to making pay-TV more affordable.

Further complicating matters for Smart TV is the recent government directive to ban the sale of Digital Video Broadcasting Terrestrial (DVBT1) set-top boxes. Instead, the government has advised the use of DVB-T2 set-top boxes, arguing that the new technology renders DVB-T1 obsolete.

Smart TV's channel lineup includes:
  1. Africa Sports Network (ASN) broadcasting premier league and NBA games.
  2. Sentanta Sports covering major European football leagues and featuring exciting magazine programs.
  3. Fox Entertainment, offering popular shows.
  4. Hi Nolly, a West African entertainment channel.
  5. MTV Base, showcasing music.
  6. Star, providing Hollywood entertainment such as movies, fashion, and celebrity content.
  7. Kids Co, a children's entertainment channel.

Smart TV set-top boxes are priced at Kshs 5,000, with an additional Kshs 990 for one month's subscription, bringing the total cost to Kshs 5,990. All local free-to-air channels will be accessible on Smart TV set-top boxes, even without a subscription, distinguishing them from their DStv counterparts. Unlike DStv, which primarily offers international channels, Smart TV intends to heavily invest in promoting local programming.

In response to Smart TV's entry into the local market, DStv has adjusted its pricing, reducing installation costs to Kshs 5,000 and introducing various bundle options starting as low as Kshs 830. Next Generation Broadcasting currently operates in Ghana and is planning to expand into Uganda after obtaining an operating license.