MultiChoice complaining about Netflix is not new – it also happened with WhatsApp

MultiChoice SA CEO Calvo Mawela recently said Netflix has an unfair advantage over DStv in South Africa, arguing that a regulatory change is needed to create a level playing field.

Mawela said the current regulatory regime is focused on traditional pay-TV services and does not look at streaming players like Netflix.

He said there is an urgent need for a regulatory change to catch up with technological advances.

These comments followed a significant decline in DStv Premium subscriptions, with users dumping the service for Netflix.

MultiChoice’s reaction to losing money to a disruptive competitor – and asking for this competitor to be regulated – is expected, and is also nothing new.

The same thing happened with WhatsApp

When WhatsApp started to gain traction in South Africa and decimated SMS revenue, Vodacom and MTN called for change to the regulatory framework in 2016.

Vodacom and MTN called for over-the-top (OTT) services, like WhatsApp and Skype, to be regulated in South Africa to ensure a “level playing field”.

Vodacom and MTN complained that they are subject to regulations as communications service providers in South Africa, while OTT operators like WhatsApp get a free ride.

MTN also took issue with the fact that services like WhatsApp do not pay taxes in South Africa.

The table below provides an overview of the similarities between MultiChoice’s call to regulate Netflix, and Vodacom and MTN’s calls to regulate WhatsApp.

MultiChoice/Netflix vs Vodacom-MTN/WhatsApp
Complaint MultiChoice Vodacom and MTN
Level playing field OTT streaming services like Netflix should be regulated in South Africa to ensure a level playing field. OTT services like WhatsApp should be regulated in South Africa to ensure a level playing field.
Regulations MultiChoice and DStv are subject to regulations, while Netflix is not. Vodacom and MTN are subject to telecoms regulations, while WhatsApp is not.
Taxes Netflix does not pay taxes in South Africa. WhatsApp does not pay taxes in South Africa.
Licensing Netflix should get a broadcast licence to operate in South Africa WhatsApp should get a licence to operate in South Africa
Local obligations Netflix is not subject to BEE obligations, while MultiChoice is. WhatsApp is not subject to USASA and BEE obligations, while Vodacom and MTN are.

Adapt or die

As the car replaced horse-drawn carriages, digital music replaced CDs, and smartphones replaced printed maps, so advancement in technology continues.

Fighting against technological advances is a war which cannot be won, as Vodacom and MTN found out.

WhatsApp is now used by most smartphone owners in South Africa and has replaced SMS as the preferred messaging option.

The mobile operators are now adapting to this changing landscape by offering data-centric packages and WhatsApp data bundles to serve the needs of their subscribers.

If they did not, consumers would migrate to Cell C which embraced WhatsApp and even offered its subscribers free WhatsApp data a few years ago.

MultiChoice’s challenge

MultiChoice is facing a similar dilemma to Vodacom and MTN – a new disruptive technology is costing it money, and it must fight back.

Just like SMS and mobile calls, which are very expensive when compared to WhatsApp, DStv Premium is far more expensive than Netflix.

As faster and cheaper broadband becomes available in South Africa, Netflix becomes more attractive to locals.

What makes it more difficult for MultiChoice is that it is not clear how it can fight back without cutting its DStv prices and offering an online experience in line with Netflix.

Some good news is that MultiChoice has started to adapt by creating a “leaner and more agile organisation to remain globally competitive”.

The company added that it is transforming its business to be “fit for the future”, with a strong focus on online products.

How effective MultiChoice’s strategy has been will be revealed in its next set of results.

Now read: Uncapped fibre and Netflix now cheaper than DStv Premium

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MultiChoice complaining about Netflix is not new – it also happened with WhatsApp