MultiChoice has dominated South Africa’s video entertainment space for years with DStv.
Then, in 2014, the first subscription video on demand (SVOD) streaming services appeared in South Africa – starting with the now defunct Vidi.
Other streaming services soon appeared, including VU (formerly MTN FrontRow), ShowMax, and OntapTV.
This was followed by the local launch of Netflix in January 2016.
But can SVOD services like Netflix really compete with DStv?
Netflix wins on movies and TV shows
“People who subscribe to pay TV for movies and series will migrate rapidly to SVOD, because it will simply make more sense both economically and in terms of choice of content and viewing time,” said World Wide Worx MD Arthur Goldstuck.
“It is no accident that the most aggressive SVOD service in South Africa has been launched by the company that owns the largest pay TV platform on the continent.”
Goldstuck is referring to ShowMax, launched by Naspers in August 2015. Naspers also owns MultiChoice.
Broadband penetration and quality
However, DStv is still a broad-based service with two features that set it apart from platforms like Netflix.
The first is that it is delivered via satellite broadcast, rather than packet-switched over the Internet.
Barring severe weather, DStv delivers its HD movies, TV series, and sport almost without a hitch, said Goldstuck.
“It is exempt from the outages that tend to take down high-demand Internet services from time to time.”
DStv’s second key differentiator is SuperSport.
“It has one of the best sports bouquets in the world, and for big fans of sports like rugby and soccer, is not only unmatchable but almost irreplaceable.”
“This makes up a sizeable proportion of Premium subscribers, meaning that SVOD poses little threat to the core subscriber base of DStv.”
DStv’s key failings
As much as DStv has going for it, Goldstuck also noted some of its failings.
“Firstly, the subscriber cannot cherry-pick only a select number of channels, such as the sports fan taking only sports channels at a lower rate.”
DStv’s second key failing, said Goldstuck, is that its subscription fees are high and will keep rising as the exchange rate weakens and content costs increase.
“In particular, as competition for content rights increases, the cost of content will also be pushed up. DStv will be more directly affected by this because of its emphasis on exclusive and first rights.”
Will Netflix kill DStv?
In short, Netflix will not be the death of DStv while major live sports is not part of SVOD and DStv has the rights to live broadcast most major events.
“Ultimately, the true difference between DStv and any single VOD service is that DStv is a multi-faceted, broad-based service that offers numerous options and packages to meet the needs of different segments of the market.”
In South Africa, the only VOD service that seemed to address that need was Vidi, and it hasn’t survived.
“SVOD really does depend on quality, high-speed Internet,” said Goldstuck.
“DStv does not. You can guess how that will play out in SA in the short-to-medium-term future.”