DStv’s existential threat

South Africa’s biggest pay-TV broadcaster MultiChoice is being pressed into a corner.

The rapid expansion of international and local online video streaming services threatens its once sought-after DStv Premium satellite package.

Over the last few years, DStv has seen a gradual decline in customers on its high-end Premium product.

Major driving factors behind the exodus are the constantly increasing price and the proliferation of video streaming services that more affluent customers can access.

In a January 2021 submission for industry regulator Icasa’s inquiry into pay-TV competition, MultiChoice acknowledged it is facing an existential competitive threat from these services.

The number of streaming services South Africans can subscribe to has grown substantially since Netflix officially landed in the country in 2016.

In 2021, the BBC and IPTV’s BritBox service made its debut in South Africa, bringing a host of British content with it, some of which has been missing from DStv since it shut down some UK-based channels.

Disney+ is the next to arrive in the country on 18 May, with a plethora of content from its vast and popular catalogue of movies and TV shows expected to be available.

It will join Netflix, Amazon Prime Video, Apple TV+, BritBox, and AcornTV in South Africa.

But DStv is also facing an onslaught on the local front, with various South African streaming services coming online.

E-tv launched its video streaming service eVOD in August 2021. TelkomONE preceded it, rolling out in November 2020.

The SABC also plans to launch its video streaming service in the second quarter of 2022.

Smaller parties have also launched their own offerings.

These include the likes of civil action group AfriForum, which recently launched AfriForumTV — an alternative for Afrikaans-speaking viewers to MultiChoice’s offerings like Showmax, and the kykNET and Via channels on DStv.

DStv Streama

DStv has one big advantage — video streaming services require an Internet connection.

However, the cost of fixed broadband in South Africa has dropped radically. You can get uncapped fibre capable of streaming 4K video and a subscription to several streaming services for less than DStv Premium.

The price of mobile data may also soon become cheap enough for video streaming following Icasa’s recent spectrum auction.

Households also typically have an Internet connection for more than video streaming.

Asked about this, MultiChoice remained adamant that DStv was the “most cost-effective means of family entertainment and presents the most video entertainment value”.

However, its approach to offering streaming services leaves much to be desired.

In a heavily criticised move earlier this year, DStv reduced concurrent streams to one, even on streaming-only packages.

This decision sparked calls for a boycott on social media.

It is also challenging to measure Showmax’s success as MultiChoice doesn’t publish subscriber numbers for the service.

Although Showmax offers some of the world’s most popular content thanks to MultiChoice’s licencing deal with HBO, there are indications that things might not be going the way they hoped.

Showmax has repeatedly offered promotions that include two-for-one subscription deals.

DStv’s streaming services and Showmax have their streaming quality capped at 720p, while Disney+, Netflix, and Amazon Prime Video all have 4K available.

DStv could also be growing concerned about one area where it has been dominant for years — sports broadcasting.

Big international players have shifted their gaze towards this potentially lucrative revenue stream for advertising.

Sporting federations are gradually disintermediating broadcasters. Formula 1, Premier League football clubs, and even FIFA offer dedicated streaming apps for fans.

Amazon and Disney+ have thrown their hats into the ring for the right to stream Indian Premier League cricket between 2023 and 2027.

Multinationals like Amazon, Apple, Disney, and Netflix have much more cash to offer for the rights to this content, and they have recognised the opportunity.

YouTube recently won the exclusive rights to stream 15 major league baseball games in 182 countries.

Apple TV+ has been streaming Friday Night Baseball in 2022 and is reportedly close to sealing a deal for the National Football League’s Sunday Ticket rights from 2023.

Should these companies begin to turn to smaller regions like South Africa as a ripe market for advertising revenue on globally popular sports like soccer, rugby, and cricket, MultiChoice could find itself priced out of the rights auctions.

MultiChoice did not acknowledge the threat when asked about this. Instead, it told MyBroadband that SuperSport would remain a long-term supporter of local sport — as an investor and a broadcaster.

One-stop shop? Not so much

MultiChoice previously expressed big plans to become an entertainment super-aggregator, effectively offering a one-stop shop for various streaming services alongside DStv.

It has had some success on this front with the Explora Ultra decoder, which offers Netflix, Amazon Prime Video, and YouTube on top of DStv and Showmax.

However, with the third-party apps also being available on a myriad other smart TV and mobile platforms, it is difficult to see the benefit of getting an Ultra decoder unless DStv somehow bundles these subscriptions with its own at a discount.

In this regard, it has failed, while rivals like France-based Canal+ have succeeded.

Here there may be some hope, as there are murmurings that Canal+ may be looking to acquire MultiChoice.

MultiChoice has also kept eerily quiet on progress regarding its DStv Streama, which it announced more than 19 months ago.

Asked about the Streama, MultiChoice said it would announce information about the launch later.

The Streama is a compact media box that would have to go toe-to-toe with Apple TV and the slew of Android TV media boxes already on the market.

For the more technically inclined, media platform developer Plex has also started offering aggregating services in its apps — and made it available for free.

With consumers getting more comfortable with an array of existing options on the market, and more TVs offering operating systems with built-in app support, time is running out for MultiChoice to pivot.

Now read: Disney+ pre-registrations launch in South Africa — with special pricing

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DStv’s existential threat