When Netflix announced it was launching its streaming video service around the world in January 2016, it brought a dramatic halt to MultiChoice’s unchallenged growth in the premium video entertainment space in South Africa.
This was emphasised when MultiChoice argued that Netflix should be regulated in the same way broadcast pay-TV operators are in South Africa.
The first indications of Netflix’s effect on MultiChoice’s DStv Premium offering came from Naspers financial statements in 2016, which showed that there was a dramatic slowdown in new DStv Premium sign-ups.
In 2018, Naspers finally reported that DStv was losing Premium subscribers.
An analysis of Naspers financial results—using the figures it reports for total subscribers and its subscriber mix of Premium, Compact, and lower-end packages—showed that across its entire African operation, MultiChoice had been losing DStv subscribers since its 2015/16 financial year.
Netflix launched in January of that year.
While MultiChoice’s DStv Premium packages suffered after the launch of Netflix in Africa, its overall subscriber base continued to grow.
Even though DStv Premium was losing popularity, MultiChoice was still signing up customers to mid-tier (Compact) and lower-end services.
This is apparent in MultiChoice’s reported average revenue per user (ARPU), which has been declining in South Africa since 2017.
DStv’s ARPU from its subscribers in South Africa since March 2015 is as follows:
- March 2015 – R337
- March 2016 – R347
- March 2017 – R353
- March 2018 – R344
- March 2019 – R304
- March 2020 – R290
Speaking in a recent interview with BusinessDay TV, MultiChoice Group CEO also confirmed that the company has continued to lose Premium bouquet subscribers.
We have outlined MultiChoice’s reported DStv Premium subscriber figures since 2012 below.
DStv Premium in Africa: 2012 – 2018
The following chart shows how DStv Premium subscribers in Africa declined between 2015 and 2018, according to figures reported in Naspers’ annual results.
Unfortunately, it is not possible to directly compare these figures to those for 2019 and 2020, because MultiChoice has changed the way it reports subscriber numbers.
Naspers spun off the MultiChoice Group into its own listing on the Johannesburg Stock Exchange in 2019.
After the unbundling, MultiChoice started reporting a “Premium subscribers” figure, which is actually a combination of DStv Premium bouquet and DStv Compact Plus bouquet subscribers.
As a result of this change, MultiChoice is now reporting subscriber growth across all its operations in Africa for its premium segment.
In other words, DStv Compact Plus is growing enough in the rest of Africa to offset those DStv Premium subscribers cancelling their packages.
DStv changes the way it counts subscribers
In addition to bundling DStv Premium and DStv Compact Plus subscriber numbers together, MultiChoice also changed the way it counts subscribers.
Until this year, MultiChoice reported its subscriber numbers based on how many paying subscribers it had at on 31 March every year – the last day of its financial year.
In 2020, MultiChoice switched to reporting the number of subscribers that have been active in the past 90 days.
It should be noted that this reporting change was announced when the company released its first financial results last year as an independently listed entity on the JSE.
To illustrate the impact of this change, the image below shows a side-by-side comparison of how the total subscriber numbers being reported changed.
When looking at the total DStv subscriber base, the new reporting method increases the number of subscribers in 2019 from 15.1 million to 18.6 million.
As a result of these changes, it is no longer possible to easily plot the decline of DStv Premium in Africa.
MultiChoice chief financial officer Tim Jacobs told MyBroadband that when Naspers spun off the MultiChoice Group into its own JSE listing in February 2019, they decided to change the reporting method.
“We had to make a choice between giving more information than what people were getting under the Naspers umbrella, but at the same time recognising that this is really competitive information and we don’t want to get to that level of granularity,” Jacobs stated.
“What we tried to do was to give additional metrics such as the average ARPU and price increase within that bucket of bouquets.”
Jacobs said these changes were generally favourably received by investors, though he admitted that some investors have been frustrated at not being able to drill down into a specific bucket, like DStv Premium subscriber numbers.
DStv Premium and Compact Plus in South Africa: 2018–2020
The change from counting subscribers as at 31 March every year to a 90-day active measurement also caused an increase in the number of DStv subscribers reported in South Africa.
The following image shows a side-by-side comparison of the DStv subscriber mix in South Africa between 2019 and 2020. Note the jump in 2019 from 7.4 million to 8 million subscribers.
Similarly, the number of DStv Premium and Compact Plus subscribers reported for 2019 increases from 1.5 million to 1.6 million.
DStv subscriber reporting from 2012 to 2020
The following table provides a summary of how MultiChoice’s subscriber number reporting has changed over the years:
- Before 2016, DStv Premium subscriber numbers were not specifically reported, but could be calculated using the subscriber mix statistic provided by Naspers.
- Naspers did not report the DStv subscriber mix for South Africa. MultiChoice started doing that in 2019.
- Before 2020, MultiChoice reported its subscriber numbers as on the last day of its reporting period. For its financial year-end, this is 31 March.
- In 2020, MultiChoice switched to reporting 90-day active subscribers.
The figures in the table below refer to total subscribers across all the regions in which the MultiChoice group operates.
|Year||DStv subscribers at 31 March||90-day Active DStv subscribers||DStv Premium subscribers on 31 March||DStv Premium and Compact Plus subscribers on 31 March||90-day Active DStv Premium and Compact Plus subscribers|
|Notes: DStv Premium subscribers for 2012-2015 estimated by multiplying Premium subscriber mix percentage with total DStv subscribers|