Multichoice is game for some competition
Multichoice is not afraid of competition in the pay TV market and more operators will even benefit the company, said the company’s recently appointed chief operating officer Collins Khumalo.
Khumalo, a tennis fan and squash player, has the television set in his office at Multichoice’s head office in Randburg tuned to the French Open.
The building’s multi-coloured interior is abuzz with activity as the 1300-strong staff prepares for a busy few months.
As the Confederations Cup soccer tournament approaches, Multichoice is beefing up its call centre and various operations in anticipation of a spike in demand for subscriptions to its local service.
Khumalo will complete his sixth month at Multichoice at the end of June, and already he has to contend with two new entrants into the market.
In 2007 five new pay TV licensees were announced. These were Multichoice (which was previously operating in an unregulated market), e.sat (e.tv), On Digital Media (ODM), Telkom Media and religious content broadcaster Walking on Water (WoW TV).
E.tv, after warning the Independent Communications Authority against awarding more than two licences, announced that it had dissolved e.sat and sold its eNews channel to the Multichoice platform instead.
WoW’s chief financial officer Luyanda Mangquku said the operator would be on air by mid-2009, but would not give a date.
ODM’s chief executive Vino Govender said it would launch in the fourth quarter of the year and, with financing of R1-billion, would break even in the next three years.
Telkom Media, which was recently acquired by Chinese media group Shenzhen Media, has not announced a revised broadcast strategy.
As the only pay channel operator, Multichoice has enjoyed a monopoly, but has recently launched a host of new services, channels and packages — from as low as R20 a month — in a bid to corner the market before the competition arrives.
“We welcome competition,” Khumalo said, “and I’m not just saying that. When new entrants come into the market it increases awareness about the industry and our products as well.”
With the Confederations Cup and World Cup football tournaments taking place in South Africa, Multichoice is expecting a surge in subscribers, but Khumalo was tight-lipped about the expected increase in numbers.
Naspers, the Multichoice holding company, will announce its annual results at the end of the month, preventing Khumalo from revealing sensitive data such as revenues and current subscriber numbers.
He did, however, say people continued to purchase subscriptions at “a voracious pace” despite the credit crunch.
“I think there is still room for us to grow further and even beyond what the World Cup is creating. They might buy subscriptions, but we need to make sure that they keep the service by catering to other members of the family who might not be sports fans,” he said.
In his 14 years at Multichoice, Khumalo has worked in the Botswana operation as general manager and as managing director of Multichoice Nigeria.
“I learnt more about subscriber management services in Botswana, and in Nigeria I learnt about dealing with cash-based markets. Over there we’re dealing with almost 99% cash customers, whereas in South Africa we have 85% debit order penetration.
“But we’re also seeing more and more of our customers in South Africa moving away from debit order payment. The focus right now is to make it easier for people in far-off places to get a subscription,” he said.
He is currently involved in negotiations to purchase a new satellite transmitter/receiver as the current one nears the end of its lifecycle.
The new unit will help preparations for the expected surge in high-definition (HD) television, as well as support current Internet protocol (IP) television trials.
“While we’re seeing many fibre optic networks being built, the last mile transmission is still going to be a constraint,” he noted. “If we launch IP TV, we’ll target gated communities as they have proper infrastructure and sufficient broadband capacity.
“We believe that, over the long term, in about five to 10 years, most content will be delivered in HD. We only offer one channel now, but the mix will change as producers shift into HD content production,” he added.
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