MultiChoice recently announced price increases to most of its DStv packages, with fees going up by 8% or more.
DStv Access and EasyView were spared, with EasyView seeing a price drop from R39 to R29 per month. Decoder insurance prices did not change.
This was an unusually high price hike from MultiChoice, which typically raises prices in line with inflation [Read: DStv prices – 2000 to 2016].
Stats SA said the average CPI for 2015 was 4.56% – compared to the hikes of 8% or more.
The reason for the price hike, said MultiChoice, was the dramatic weakening of the rand in 2015 – with our currency losing 29% of its value since April 2015.
“[Foreign currency] is a huge amount of our costs,” said MultiChoice COO Mark Rayner.
The biggest component of this is content, but its technology suppliers and satellite leases are also priced in US dollars.
Overall, foreign currency makes up the majority of DStv’s cost base, said Rayner, which means it is affected a lot by rand strength.
While they can take forward cover to mitigate the effect of the weakening rand to a small degree, Rayner said they really had to look at their costs across all the areas of the business to keep prices in check.
|DStv packages||2015 price||2016 price||% increase|
|DStv specialist packages||2015 price||2016 price||% increase|
|DStv South Indian*||R239||R260||8.79%|
|DStv add-ons||2015 price||2016 price||% increase|
|BoxOffice PVR rentals||R30||R35||16.67%|
|DStv Indian add-on||R205||R220||7.32%|
|DStv South Indian add-on||R155||R170||9.68%|
|DStv Portuguesa add-on||R205||R220||7.32%|
|*No longer on offer – only available to subscribers still on the package.|
How to cut costs when everything becomes more expensive
Rayner said that on top of the weakening rand, DStv’s input costs are rising in dollar terms too.
They have a new satellite going up next year, Intelsat 36, which will cause a step-change in DStv’s cost base. Premium content and sports rights have also become significantly more expensive, he said.
This means MultiChoice has had to look elsewhere to manage costs.
Rayner said they have had conversations with suppliers to cut content, channels, or prices – depending on what rates well with viewers, and what doesn’t.
MultiChoice’s equipment providers have also come to the party to help contain technology costs, he said.
The cost of exclusive licences, and the big move
Challenged on MultiChoice’s exclusive licensing of content and its recent move to new offices, Rayner said the move had no material impact on costs.
“We were sprawled all over Randburg,” he said. They decided to take a long-term view, considering MultiChoice’s commitment to Randburg in terms of the infrastructure it had already deployed there.
“There are actually savings there,” he said.
However, Rayner said they have had to relook exclusive content licensing in light of the weakening rand.
“We still want to keep the very best content for our subscribers as far as we can afford.”
“We have to decide whether it’s something worth paying for exclusivity for. Those conversations are brought into sharp focus now when times are tough.”