DStv struggles to grow in South Africa — but Showmax is rocking

MultiChoice released its financial results for the year ended 31 March 2022, which revealed a 4% increase in revenue — up from R53 billion in 2021 to R55 billion in 2022.

Despite the increase in revenue, MultiChoice’s profit for the year declined from R4.07 billion in 2021 to R2.88 billion in 2022.

The 29% profit decline was mainly a result of net foreign exchange translation losses, which increased from R757 million to R2.12 billion over the last year.

MultiChoice’s South African business also faced an increasingly difficult consumer climate.

The company said rising unemployment levels, intermittent load-shedding and disruption caused by the July riots in Durban and Johannesburg impacted its business.

MultiChoice’s year-on-year growth in South Africa was only 1% — or 100,000 customers.

Revenue in South Africa increased by 4% to R35.6 billion, supported by a rebound in advertising revenue and a 1% increase in subscription revenues.

While DStv struggled to gain subscribers, Connected Video users on the DStv app and Showmax showed strong growth.

Paying Showmax subscribers increased by 68% over the last year, while monthly online users increased by 28% overall.

A major driver of this segment has been the ongoing focus on localisation, including expanding local payment channels and enabling local billing.

Local content on Showmax also fuelled growth. Titles like Devilsdorp, The Real Housewives, and The Wife grew interest in the streaming platform.

MultiChoice’s prospects

MultiChoice is planning to return its Rest of Africa (RoA) business to profitability in the current financial year.

The rest of its plans are not concrete and reads more like a wish list than a strategy for growth in a rapidly changing market.

For example, MultiChoice said it plans to “drive the penetration of its video entertainment services across the African continent by offering customers an array of unique and rich media content delivered in a convenient and cost-effective way”.

It also said, “maintaining strong cash flows to support a healthy balance sheet and pursuing innovative products and services remain key pillars for long term value creation”.

These statements will do little to build investor confidence by showing that it is ready to do battle with Netflix, Disney+, and other streaming services.

Commenting on MultiChoice’s prospects, FNB Wealth’s Wayne McCurrie said the company is facing a tough future with competition from streaming providers.

Netflix, Amazon Prime Video, and Disney+ have deep pockets and operate on a large scale with thin margins.

MultiChoice’s DStv service is expensive compared to Netflix or Disney+, which puts pricing under pressure.

To date, sport has been DStv’s killer content. However, many sporting codes and events are now available online for much cheaper than DStv Premium.

Therefore, MultiChoice is under pressure to prevent an outflow of customers with an influx of online streaming competitors.

MultiChoice Group 2022 Annual Results overview


Now read: MultiChoice share price hammered as profits stall

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DStv struggles to grow in South Africa — but Showmax is rocking