What MultiChoice is doing about declining DStv Premium subscriber numbers

Naspers recently released its annual results, which revealed that MultiChoice continued to bleed DStv Premium subscribers.

The results echoed statements MultiChoice South Africa CEO Calvo Mawela made in May, when he said Netflix was eating into their market share.

Mawela said DStv’s subscriber base was growing overall, but the growth was coming from less-profitable, lower-end packages.

This is a concern for MultiChoice, and its profits.

For the financial year ended 31 March 2018, MultiChoice saw a 13% overall growth in its DStv subscriber base – from 11.942 million to 13.476 million.

However, across Africa, it saw a decline of 41,000 DStv Premium subscribers – from 1.962 million to 1.921 million.

This resulted in a decline in the average revenue per user from R353 per month to R344 per month.

DStv Premium
DStv subscribers.

Popularity of streaming to blame

When asked whether DStv Premium price increases and the economic pressure on the middle class had anything to do with the loss of high-end subscribers, Mawela said competition from Netflix was to blame.

“I don’t think we are expensive in terms of the full entertainment package that we give,” said Mawela.

He also highlighted one of DStv’s biggest strengths – SuperSport.

Even in the UK, pay-TV subscribers can’t get all the English Premier League matches which are broadcast on SuperSport, he said.

The issue is not price, but the market’s shift from direct-to-home broadcast services to on-demand platforms like Netflix.

He explained that research showed once someone switches to a streaming service, they do not come back to broadcast TV.

DStv streaming services

To respond to the changing market, MultiChoice said it is developing a standalone DStv streaming service.

Mawela said they have taken significant strides toward offering a streaming-only package, but there are obstacles to overcome.

He said their biggest obstacle was not sports broadcasting rights, but securing the streaming rights for all the entertainment content they offer on existing DStv packages.

MultiChoice was able to secure the last of these rights in 2018, making it possible for DStv Now to offer live streaming of every channel included in the DStv Premium package.

Through initiatives like DStv Now and Showmax, MultiChoice has tried to ensure it is ready for the evolution of the subscription TV space.

Regarding launch timeframes, Mawela said their standalone streaming package is still a work in progress.

The company is waiting for DStv’s digital media division to come up with a full commercial plan for the service, along with an activation date, he said.

Appeal to ICASA

MultiChoice has also appealed to ICASA not to over-regulate the pay-TV space, as part of recent public hearings with the regulator.

ICASA released a discussion document regarding its inquiry into pay TV in 2017, where it laid out 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 rights, and forcing MultiChoice to licence its rights to other broadcasters.

Mawela warned that DStv as a satellite pay-TV service was operating on borrowed time, and heavy-handed regulations will kill its business.

He said over-regulating the market will hand it to global giants like Netflix and Amazon, and cost South African jobs.

Mawela argued that ICASA should rather liberalise the market and ensure online services comply with the same regulations as local broadcasters.

These include local taxes, obtaining a broadcast licence, and meeting BEE requirements.

Mawela said ICASA’s online regulations must not be too stringent, however, and should leave user-generated content alone.

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What MultiChoice is doing about declining DStv Premium subscriber numbers