The death of DStv Premium

MultiChoice’s DStv Premium product faces a massive threat as many of its international providers are closing their content distribution pipelines and moving their movies and shows to their own streaming services.

This is according to South African broadcasting analyst Thinus Ferreira, who recently spoke to MyBroadband about the future of the top-end package.

Ferreira warned that many major content providers could give DStv the boot in the coming years when their respective content deals with MultiChoice expire.

“WarnerMedia, Disney, Discovery, ViacomCBS, NBCUniversal, and British content funnels are in the process of being taken away from DStv subscribers,” Ferreira said.

BBC and ITV recently launched their BritBox streaming service in South Africa, featuring some of the content no longer available on DStv, after it cut certain channels provided by the popular UK broadcasters.

Disney+ is also set to launch in South Africa next year, which should see DStv lose access to premium Disney content, including movies and shows from the Marvel and Star Wars franchises, as well as its National Geographic documentaries and shows.

It remains to be seen whether WarnerMedia plans to roll out HBO Max in South Africa.

Such a move would not only be devastating to DStv Premium, but also its streaming service Showmax, which leverages its HBO offering as a big selling point.

Even with this content, the company has been bleeding DStv Premium subscribers in the last few years.

This has been driven by the migration of subscribers to cheaper on-demand video streaming services enabled by greater broadband connectivity.

Ferreira told MyBroadband MultiChoice had lost sight of basic tenets of consumer psychology and was experiencing an identity crisis amidst the video streaming wars.

“Consumers don’t mind paying a lot for something expensive. However, whether you’re rich, middle-class, or poor, nobody wants to waste money or feel as if they’ve been taken advantage of,” he explained.

The problem is that MultiChoice keeps diluting its DStv Premium offering and is not doing enough to bolster or even maintain the value offered, Ferreira stated.

In recent years, the company has dropped several of its more popular international channels and appears to be prioritising local content.

However, Ferreira said its so-called “hyper-local” focus and emphasis on mid-market customers felt like “a bit of a cop-out”.

“It’s what MultiChoice should be doing anyway,” Ferreira said.

“It’s as if MultiChoice is saying it’s too difficult or too challenging to successfully run or build out a first-class section, where you can earn a higher ARPU [average revenue per user] that make your investors’ smile, creates aspiration and upgrade incentives for customers, and brings a level of prestige to your brand.”

While MultiChoice has said it aims to become a super-aggregator that offers a one-stop shop for streaming and broadcasting services, Ferreira said the company’s approach has been languid compared to the UK’s Sky and US’s Comcast.

MultiChoice has still not launched its planned DStv Streama streaming box, which was announced a year ago, while its Explora Ultra currently only features a handful of streaming services.

“Besides Netflix and Amazon Prime Video, MultiChoice failed so far to add any other global streamers into its third party streaming app environment while Sky and others constantly expand their value-added services to their premium customers to prevent subscriber churn,” Ferreira said.

Ferreira believes DStv should consider an alternative model which comprises a must-take, basic standard tier or block of channels, to which customers can build, add, change and customise their own content experience.

“For instance, this month as a DStv subscriber, you want to subscribe to two blocks of sport each with their handful of channels, an additional block of premium entertainment channels, and a block of Afrikaans content,” he explained.

“Next month, you just want one block of sports without football since there’s no football on, an add-on of movie channels, and because it’s a school holiday, Netflix and Disney+.”

Ferreira recently reported that the broadcaster was testing a model which uses exactly this approach, dubbed DStv Flex.

“The idea of DStv Flex seems like a fairer approach for the new streaming and skinny bundle age,” Ferreira said.

“You’re still not getting to choose your channels, but instead of big packages, you get to compile smaller sets of channels to create your own content and viewing experience from month to month.”

Now read: Big changes planned for DStv Premium — including choosing your own channels

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The death of DStv Premium