DStv’s big pricing problem
Despite steadily losing subscribers since 2019, MultiChoice continues to hike the price of its DStv packages every year.
The latest price increase took effect on 1 April 2023 and saw subscription fees rise by an average of 4.3% across DStv’s satellite pay-TV portfolio.
The MultiChoice-owned pay-TV broadcaster has reigned in its price increase, relatively speaking, since 2018, but customers continue to cancel their subscriptions or downgrade to lower-tier packages.
The company’s financial results for the year ended 31 March 2023 reveal that it lost approximately 144,000 South African subscribers between 31 March 2022 and 31 March 2023.
Between the two previous years, 2021 and 2022, the decline was significantly less and saw DStv lose approximately 17,000 year-end subscribers.
MultiChoice breaks down DStv subscriber numbers into segments, with the premium and mid-market segments seeing the most significant declines.
The premium segment includes DStv Premium and Compact Plus subscribers, while the mid-market comprises Compact and commercial subscribers.
The chart below plots DStv’s price increases and subscriber numbers from 2019 to 2023 in the premium segment.
DStv Compact Plus and Premium pricing versus premium segment subscriber numbers from 2019 to 2023.
Between 2019 and 2023, DStv’s Premium and Compact Plus pricing increased by R70. Over the same period, its subscriber base in the premium segment declined by approximately 300,000 customers.
This is despite DStv’s overall subscriber base increasing substantially in 2020 and 2021, driven mainly by growth in entry-level customers.
DStv is also losing subscribers in its mid-market segment. The subscriber base peaked at three million in 2021 and has also lost around 300,000 subscribers since.
Between 2019 and 2021, DStv’s mid-market grew steadily from 2.8 million subscribers. However, the decline from 2021 onwards correlates with DStv’s 2022 and 2023 price hikes for the Compact package.
These years saw the highest price increases in DStv’s Compact package. In 2022, DStv’s increased its Compact package’s price by 4.89% and implemented a price hike of 4.70% in 2023.
For reference, it increased the Compact package price by 3.54% and 2.51% in 2019 and 2021, respectively. It didn’t implement any hike in 2020.
The chart below plots DStv’s Compact price increases against its mid-market subscriber numbers over the years.
DStv Compact pricing versus mid-market segment subscriber numbers from 2019 to 2023.
South Africans ditching DStv in tough times
A recent survey from InfoQuest revealed that MultiChoice’s DStv is among the hardest hit by cost-cutting in South African households.
The country’s inflation rates have increased substantially in recent months, substantially pushing up the price of food, fuel, and other essentials.
To curb inflation, the Reserve Bank has implemented a series of interest rate hikes, pausing adjustments for the first time in several cycles this month.
This, combined with electricity, water, and property tariff hikes, has forced many South Africans to implement cost-cutting measures, particularly regarding non-essential services like gym memberships and TV subscriptions.
18% of participants in the survey said they were forced to terminate their DStv subscriptions due to these financial pressures.
Of the casualties, DStv was second only to gym memberships, which 28% of respondents said they had cancelled.
Banking on Showmax
With linear pay-TV subscribers starting to decline in South Africa, MultiChoice has gone all-in on its streaming service, Showmax.
Showmax and MultiChoice Connected Video CEO Yolisa Phahle said in a recent presentation to investors and shareholders that the streaming platform would make R18 billion in net revenue in 5 years — an astounding figure.
To achieve this goal, MultiChoice has inked a deal with Comcast’s NBCUniversal and Sky in March to sell a 30% stake in Showmax.
Showmax will switch to using Peacock’s technology as part of the deal. Peacock is NBCUniversal’s video streaming service.
MultiChoice CFO Tim Jacobs has told MyBroadband that the Connected Video team is working full steam on customising Peacock for the African countries where MultiChoice operates.
This includes being able to take payments, ensuring apps run on lower-end devices, and optimising data consumption for users without uncapped connections.
The launch of “Showmax 2.0” is currently set for the second half of MultiChoice’s financial year — between October 2023 and March 2024.
Now read: Why DStv owner MultiChoice’s share price is getting hammered
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