Netflix and Prime Video on DStv – The video streaming endgame

In a surprise announcement to investors during its annual financial results presentation, MultiChoice revealed that it had signed distribution agreements with Netflix and Amazon Prime Video.

Such a partnership may seem strange. To an outside observer, MultiChoice and Netflix are mortal enemies.

Just two years ago, MultiChoice was asking ICASA to regulate Netflix in the same way as broadcast pay-TV in South Africa.

It said that Netflix should pay taxes in South Africa, get a broadcast licence, maintain a local presence in South Africa, have an obligation to develop local content, abide by the Film and Publication Board’s classification guidelines, and meet BEE requirements.

Naspers set up Showmax to try and build a direct competitor to Netflix, but even with deep pockets, it could not keep pace with the amount of money Netflix was spending on content acquisition and development.

Since then, Naspers has integrated Showmax into the MultiChoice stable, and spun off MultiChoice as a separate listed entity on the Johannesburg Stock Exchange.

The inability of Naspers, and later MultiChoice, to outspend Netflix on content is the biggest reason a partnership was inevitable. After all, if you can’t beat them, join them.

The Great Unbundling

Broadcasting industry pundits have been predicting it for years, and subscription-based video streaming services like Netflix eventually sparked a wave of unbundling in pay-TV.

Services like DStv bundle together content from various studios and networks into channels of movies and shows, then further bundle in channels like SuperSport, Discovery, Comedy Central, and news.

However, pay-TV subscribers around the world asked for more customisation and ways to pay less money every month for only the content they wanted to watch.

This is what video streaming started to deliver.

Initially, Netflix only aggregated older content from established movie studios and TV networks, but soon enough it started producing its own programmes like House of Cards and Orange Is the New Black.

Hulu had a similar start, but with a different business model. It aggregated shows from American television networks in an online streaming service and used advertising to offset its price. Like Netflix, it has also started producing its own original content.

When Netflix went global in January 2016, it gave rise to the global television network, distributing its service over the Internet rather than over the airwaves, satellites, or specialised cables.

Amazon Prime Video followed suit, launching in over 200 countries at the end of 2016. Apple has also launched its own video streaming platform (Apple TV+) for which it is producing original content, as has Walt Disney (Disney+).

Conventional TV networks have not been blind to these developments and have launched their own streaming services such as HBO Now and CBS All Access. We don’t get these services in South Africa, but their content gets aggregated into platforms that are available here. MultiChoice has a deal in place with HBO, while Netflix has been distributing CBS’s Star Trek: Discovery outside the United States.

The Great Rebundling

With each streaming service offering its own silo of content, viewers have been asking for more convenient ways to discover and stream shows and movies from the different platforms.

If you’re a Star Trek fan in South Africa, for instance, you might find it frustrating that Star Trek: Discovery is on Netflix, but Star Trek: Picard is on Prime Video.

The rise of aggregation platforms for streaming video, like the one MultiChoice is building, was therefore inevitable the moment that Netflix went global.

It’s also a more natural transition for MultiChoice than you might think. Aggregating video entertainment from around the world, while bundling in originally developed productions including sport, is precisely what they have been doing for years.

If you can’t beat them, join them

While the details of the deals between MultiChoice, and Netflix and Amazon haven’t been announced yet, we do know that at the very least there will be a new DStv Explora decoder with apps for Netflix and Prime Video.

There are also strong indications that DStv will have some kind of bundle or bolt-on product that includes Netflix and Amazon Prime Video along with your DStv subscription.

MultiChoice CFO Tim Jacobs told MyBroadband that the agreements with Netflix and Amazon formed part of a new unified streaming platform that MultiChoice will launch, which will include content from international players.

“What we are trying to do is to provide an amount of simplicity, choice, and convenience to subscribers – they can come to one place and can get access to all of this different content,” said Jacobs.

MultiChoice was asked whether it would broadcast Netflix and Amazon original content over its linear satellite channels, but the company did not respond to a request for comment.

Same, but different

One major difference between what MultiChoice was doing previously and the new era of video streaming is that the field of competition has increased significantly.

MultiChoice will now be competing with the likes of Apple, which is building a mass-market aggregation platform through its Apple TV set-top box.

DStv may be able to carve out a niche by understanding the markets its serves intimately, while Apple’s focus, for now, remains mainly on the United States.

However, the pricing of its new Explora decoder and streaming bundles will make or break its transition from an effective pay-TV monopoly to a competitive content aggregator.

MultiChoice still holds a trump card in SuperSport, which has bought it some time.

Another major change brought about by video streaming is that Netflix and Prime Video are available directly to viewers in South Africa. You don’t have to go through MultiChoice, or any other aggregator, to get to their content.

This means that subscribers will be able to do direct pricing comparisons with DStv’s bundled offerings. It also means that you don’t have to be beholden to bundles created by aggregators.

Finally, you can take direct control over which channels you are subscribed to from month to month. Except we don’t call them channels anymore, we call them streaming services.

This is an opinion piece.

Now read: DStv plans to become a one-stop-shop with Netflix, Amazon, Hulu, and YouTube

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Netflix and Prime Video on DStv – The video streaming endgame