Piracy is a bigger competitor to Showmax and DStv Now than Netflix, since a wide variety of content, including unreleased movies, is available on torrent sites for free.
This is the view of senior manager for customer experience for MultiChoice’s Connected Video unit, Nicolas Callegari, who shared his views with Brainstorm Magazine.
He does not see competitors like Netflix as a threat to Showmax and DStv Now. “I see our ability to change with the times as our biggest challenge,” he said.
“If the industry decides it’s going to go off in a completely different direction, we need to be able to pick up our bags and run in that direction.”
Increased competition from Netflix and piracy
MultiChoice reiterated these views on piracy in its submission to ICASA’s Inquiry into Subscription Television Broadcasting Services.
Multichoice said that it has not only seen increased competition from the emergence of legitimate providers – such as Netflix – but also from piracy.
“The piracy of electronic audio-visual content is on the rise and posing a huge threat to traditional Pay TV services,” it said.
“For example, MultiChoice estimates that more than two million people view pirated versions of the series and movies available on DStv in South Africa.”
MultiChoice added that piracy is also pervasive in sports, which is one of the main reasons why people subscribe to DStv’s premium service.
“The reality is that piracy is a further competitive constraint on Pay TV services in South Africa,” MultiChoice said.
It is, however, not only torrent sites which poses a threat to MultiChoice’s DStv service.
In its listing documents, MultiChoice said “unauthorised access to programming signals may adversely affect the group’s revenue and programming arrangements”.
“The delivery of subscription programming requires the use of conditional access technology to prevent unauthorised access to programming, or ‘piracy’.”
MultiChoice said it mainly uses conditional access technology supplied by Irdeto, and it needs to be updated continually to remain effective.
“The group will continue to incur substantial expenditures to replace or upgrade its conditional access technology in the future,” the company said.
It added that conditional access, however strong it is, technology cannot completely prevent piracy.
“Virtually all video entertainment markets are characterised by varying degrees of piracy that manifest themselves in different ways.”
It warned that if unauthorised access to transmissions are not adequately prevented, subscribers could switch to pirated signals.
Piracy’s impact not certain
ICASA, however, said it wasn’t sure how much piracy actually constrained subscription broadcasting as claimed by Multichoice.
“The authority considered the advent of piracy and whether it constrains subscription broadcasting as claimed by Multichoice,” it said.
“It came to the conclusion that since there are various efforts to stem the tide of piracy not only in South Africa but globally, it does not offer a strong competitive constraint on subscription television.”