Pay TV businesses on the continent are in line with difficult trading conditions ahead. For example, recent industry reports have revealed that MultiChoice’s South African business faces headwinds with rising competition, declining subscriber growth, and a slap on its exclusive sports rights.
Over the last few years, MultiChoice’s biggest money spinner, DStv Premium, started losing subscribers in the 2016 financial year. MultiChoice was hit by a perfect storm of increased uncapped broadband penetration and affordable streaming services arriving in South Africa.
In January 2016, Netflix launched in South Africa – the same year DStv Premium numbers started to decline. At US$7.60 per month, Netflix provided an attractive alternative to DStv for those with uncapped Internet.
According to reports, the launch of Netflix saw DStv Premium subscriptions decline every year. Additionally, MultiChoice lost hundreds of thousands of premium subscribers over the last six years.
Furthermore, MultiChoice and SuperSport came under regulatory scrutiny for abuse of dominance. In responses, MultiChoice argued that it operated in a highly competitive market amidst many over-the-top (OTT) streaming providers.
The pay-TV operator added that OTT providers like Netflix, YouTube, and Disney+ pose a competitive existential threat to its DStv offering. In its latest results, MultiChoice revealed that year-on-year growth in South Africa was only 1 per cent, the lowest in fifteen years.
The broadcaster blamed rising unemployment levels, load-shedding and disruption caused by the July riots around the country, impacting its business.
MultiChoice’s DStv Premium subscriber offering was hard hit, declining from 1.7 million in 2018 to 1.4 million in 2022.
According to Raj Makanjee, CEO of FNB Retail, their retail customers spend up to US$1 144 million per month on audio and video streaming subscriptions.
In 2017, 52 per cent of MultiChoice SA’s revenue came from premium subscribers. This has since declined to 37 per cent in 2022. In response to this crisis, MultiChoice is now partnering with streaming services.
MultiChoice CEO Calvo Mawela said they plan to make DStv a one-stop shop where subscribers pay one bill to access all streaming content, including Netflix, Amazon, Hulu, and YouTube.
The pay-TV operator recently added Disney+ to the mix following an agreement with Walt Disney Africa. Mawela noted that adding OTT players to the DStv platform is a natural progression of pay-TV into the online space.
“We have always seen ourselves as a one-stop-shop where you can get content from all content producers in Africa and around the world,” said Mawela.