As fibre broadband rolls out to South Africa’s townships, people will switch away from satellite TV services to online platforms like Netflix.
This is according to DStv research, which shows that once someone makes the switch to an online subscription video service, they don’t go back to satellite TV.
MultiChoice South Africa CEO Calvo Mawela said there is no doubt that the future of pay TV is online, which is why they are arguing that satellite and Internet-based pay TV services must fall under the same regulations in South Africa.
ICASA will hold public hearings on an inquiry into subscription television broadcasting services this week, and MultiChoice is pre-empting this by briefing the media on its position.
In 2017, ICASA released a discussion document on the pay TV inquiry where it laid out several options to address the issue of MultiChoice’s market dominance in South Africa.
These included forcing exclusive sports rights contracts to be shortened, unbundling and splitting the sports rights, and forcing MultiChoice to license its rights to other broadcasters.
Should these regulations be passed, Mawela said it would hand the South African pay TV market to global online streaming giants like Netflix and Amazon.
“We’re just killing pay TV and allowing online a free ride,” said Mawela.
A saving grace for DStv in South Africa has been the lacklustre penetration of broadband services.
However, with the launch of Netflix locally in 2016 and the proliferation of fibre infrastructure, DStv’s market share has changed.
“Over 100,000 Premium subscribers left us in the last financial year,” said Mawela. This was largely as a result of the popularity of Netflix, he added.
He said most of their growth is happening at the lower-end of the market through DStv Access packages, where the profit margins are lower than on DStv Premium and DStv Compact.
Now with Vumatel rolling out 100Mbps fibre services to townships at R89 per month, DStv’s lower-tier services will come under pressure.
Vumatel’s plan to connect South Africa’s townships with fibre starts in Alexandra. If the pilot in Alexandra is successful, Vumatel will replicate the model in Diepsloot.
Within the next two years, Vumatel aims to connect 2.5 million homes and 10 million township residents to fibre broadband.
Mawela said Vumatel rolling out fibre to Alexandra will kill DStv’s satellite TV market share. “The future is online,” he said.