MultiChoice recently published its financial results for the year ended 31 March 2019, portraying a premium subscription segment that is under severe pressure and a growing online content offering which it asserts is now bigger than its main competitor – Netflix.
The company has been bleeding DStv Premium subscribers since 2015, and despite a price increase freeze, this trend has continued into MultiChoice’s most recent financial year.
While it did not divulge exactly how many Premium subscribers it had at the end of March 2019, MultiChoice admitted that the segment was suffering due to competition from OTT providers and a difficulty economy.
“The Premium segment remained under pressure as consumers were impacted by rising fuel and other costs and we competed for share of wallet,” MultiChoice said in its results presentation.
When it comes to competition in the over-the-top (OTT) broadcasting market, MultiChoice said its Showmax and DStv Now platforms had attracted a larger subscriber base across Africa than Netflix.
MultiChoice’s online subscribers doubled over the past year, and it said that its combined online platforms had 60% more subscribers than Netflix in Africa, based on its own estimates of Netflix’s subscriber numbers in the region.
Speaking in an interview with MyBroadband, MultiChoice CFO Tim Jacobs explained the company’s strategy to compete with Netflix going forward.
State of local streaming
“The way we think about the online streaming market is that it’s not about a land grab from each other,” Jacobs said in reference to Showmax’s competition with Netflix.
“It’s about a change in consumer dynamic and an expansion of video entertainment holistically.”
He said that the significant growth reflected in MultiChoice’s Showmax and DStv Now platforms was due in part to new entrants to the market.
The selection of OTT providers in South Africa means consumers have the option to subscribe to multiple services, as well as to gain access to DStv Now and Showmax as a free bundled offering with a DStv Premium subscription.
“There will come a point where there is more direct competition,” Jacobs said. “But in general, it looks like consumers are more than happy to take out subscriptions to multiple streaming services for now.”
He added that the low price of standalone streaming service subscriptions means these platforms are generally more accessible than traditional broadcasting subscriptions.
Competing with Netflix
Jacobs said that MultiChoice’s OTT market strategy focuses on the delivery of high-quality, varied content to consumers which they would not be able to access anywhere else.
“We have started to offer sport on Showmax along with local content to differentiate ourselves from other players,” Jacobs said.
When it comes to its sport offering on Showmax, Jacobs said that MultiChoice is currently gauging the reaction to the live sport available on the platform and could move forward with an expanded offering depending on the uptake from consumers.
Netflix and MultiChoice have begun to invest heavily in local content too, and Jacobs emphasised that its competition with Netflix would revolve around the content available on each platform.
“What we are doing at the moment is looking at our content platform and improving our content bouquet,” he said.
“We have been increasing our spend on local content production and we have expanded our content library. We use a lot of that fresh content on both Showmax and DStv.”
Jacobs said that Netflix’s target market is a global one, and it is trying to cater to each local market with a selection of content produced in other markets – implying that MultiChoice has the advantage in the delivery of local shows and series aimed specifically at South Africans and the rest of Africa.
“The level of competition in the OTT market will evolve,” Jacobs said. “Our rationale behind our content-driven strategy is we have more than a simple streaming platform. We have dedicated channels and a wide selection of locally-produced content.”