MultiChoice’s plan to win

MultiChoice is transforming from a traditional pay-TV operator to an entertainment and consumer services company.

MultiChoice originated from M-Net, a satellite television subscription service launched in 1985 with 12 hours of daily programming.

It was tough initially. However, its founder, Koos Bekker, pushed ahead and convinced shareholders that pay TV was the future.

By September 1987, M-Net’s decoders were in 50,000 homes. Half a year later, that number grew to 100,000.

The company recorded a loss of R37 million that year, but a year later, that had swung to a profit of R20 million. It was listed on the JSE at R1.00 per share in 1990.

Bekker divided M-Net into separate divisions — one focused on transmitting entertainment channels and the other on cellular operations, signal distribution, and subscriber management.

The latter would become MultiChoice, under which Naspers launched Digital Satellite television (DStv) in South Africa in October 1995.

In 1996, the service was expanded to MultiChoice’s other African markets, and DStv gradually became more sought-after due to its expanding channel selection.

In 1997, MultiChoice acquired a large stake in Irdeto, the world leader in digital platform cybersecurity.

In 2005, MultiChoice launched its first personal video recorder (PVR), revolutionising the DStv offering.

DStv Catch Up was launched in 2010, and the following year, MultiChoice launched the digital terrestrial TV platform GOTv. It launched BoxOffice the same year.

Over the next decade, there were many new product launches and innovations, including the DStv Explora, Showmax, and the DStv App.

By the mid-2010s, DStv’s subscribers stood at over 8 million, with a compound annual growth rate (CAGR) of more than 23%.

DStv became the leader in pay-TV entertainment in Africa and sports broadcasting through the SuperSport platform.

MultiChoice Group was unbundled from Naspers and listed separately on the Johannesburg Stock Exchange in 2019.

It continued its strong growth, and 39 years after its launch in South Africa, 19.3 million households in 50 countries used MultiChoice services.

The rise of streaming services and global cord-cutting trends

Affordable, uncapped broadband access and the rise of streaming services like Netflix have significantly disrupted the pay-TV sector.

Cable and satellite TV providers have lost over 20 million subscribers in the United States over the last decade, and this trend is accelerating.

The latest research reveals that there are expected to be 80 million cord-cutting households in the United States by 2026.

DStv has been surprisingly resilient. Despite global downward trends, The service has grown over the last six years.

However, the increased availability of fast and affordable fibre access in South Africa and parts of Africa and increased streaming adoption has put pressure on DStv.

In 2023, MultiChoice had 23.5 million 90-day active subscribers. Eighteen months later, the number has dropped to 19.3 million.

It showed that Africa is not immune to the global cord-cutting trend, which has forced pay-TV operators to adjust their business models.

MultiChoice has been working on transforming from a pay-TV operator to an entertainment and consumer services company to adjust to the changing environment.

Showmax is one of its core strategies. The platform has shown encouraging growth and is focused on enhancing its content line-up.

It is also bedding down distribution partnerships, expanding payment channel integrations and refining its go-to-market strategy.

Irdeto also delivered encouraging revenue growth after securing a major Asian customer and expanding managed services with a key customer in Australasia.

MultiChoice’s sports betting platform, KingMakers, continued to gain strong momentum in Nigeria, securing the second position in the online betting market.

SuperSportBet, the South African business launched late last year, showed early signs of success and reported a tenfold increase in net gaming revenue in nine months.

MultiChoice’s fintech platform, Moment, is live in 40 African countries and has grown rapidly, with total payment volumes (TPV) growing to USD 242 million.

The company’s immediate focus is on improving profitability and cash generation in its South African businesses.

It is also streamlining the cost base in the Rest of Africa to return this business to profitability and investing in Showmax to make it the leading streaming platform on the continent.

MultiChoice is further supporting KingMakers, Moment and DStv Insurance as additional revenue streams and to drive scale.

“By executing these objectives well, the group will be well-positioned to deliver future growth and create value as Africa’s leading video entertainment platform,” MultiChoice said.