DStv owner bets the farm on Showmax

MultiChoice plans to grow Showmax’s subscribers and revenue by 1,800% over the next four years and make it the top streaming service in Africa.

MultiChoice released its annual results for the 2024 financial year recently, which many analysts described as atrocious and disastrous.

The company recorded a R4.1 billion loss, suffered a 9% decline in active subscribers, and became technically insolvent.

The only glimmer of hope came from Showmax, which relaunched in February and recorded a 16% growth in paying subscribers.

With the decline in DStv subscribers, MultiChoice is pinning its hopes on Showmax to save the company and return it to its former glory.

The company said its plan is to generate $1 billion (R18.5 billion) within the next five years with its Showmax 2.0 service.

To generate this revenue, it will need to have around 16 million active subscribers paying an average of R99 per month.

This is a big ask. Digital TV Research predicts that the total number of video streaming subscribers in Africa will only be 15.6 million users by 2028.

This prediction does not bother Showmax. The company said it expects video streaming uptake to undergo exponential growth in Africa.

MultiChoice is so bullish that it wants to increase its total subscriber base, including Showmax and DStv subscribers, to 50 million users in 2028.

However, this is easier said than done. The company is struggling to hold on to its DStv subscribers, and Showmax is growing far slower than expected.

MultiChoice suffered a 9% decline in active subscribers, mainly due to a 13% decline in the Rest of Africa business and a 5% decline in South Africa.

In its latest financial results, Multichoice said Showmax subscribers grew by 16% over the last year.

Showmax revenue reached R1.03 billion, a 22.4% increase from 2023. R850 million was subscription revenue, only a 1.3% increase from the previous year’s R839 million.

To achieve its R18.5 billion revenue target, Showmax will have to grow over 100% per year for the next four years. This is highly ambitious.

Although MultiChoice did not release the latest Showmax subscriber numbers, it is estimated to be between 700,000 and 1 million.

MultiChoice indicated that it aims to capture 25 million subscribers on the Showmax platform by 2028.

Based on this forecast, Showmax would need to grow its subscriber base by around 100% a year until 2028.

Therefore, the 22.4% revenue growth and 16% subscriber growth over the last year are far short of expectations.

The charts below show the platform’s historic data in blue, and the required growth in red to meet its targets.

MultiChoice upbeat about Showmax

The lofty Showmax targets did not bother MultiChoice. It told investors that the streaming platform was doing exceptionally well.

It said the last financial year was pivotal for Showmax as it relaunched across 44 markets in sub-Saharan Africa on Peacock’s world-class platform.

Almost 100% of the eligible customer base was migrated to the new Showmax platform, and 88% of those migrated had reactivated their accounts.

It added that closing the Showmax 1.0, Diaspora and Pro offerings had a minimal net impact on the year-end base.

Showmax ramped up its local content alongside local content from M-Net, Mzansi Magic, Africa Magic, and Maisha Magic.

The streaming service released 59 original movies and TV series in South Africa, Nigeria, Kenya and Ghana.

Popular shows that drove viewership included Tracking Thabo Bester, Koek, The Mommy Club, Youngins, Red Ink, Adulting, Outlaws and Real Housewives of Durban.

It also launched the new English Premier League mobile-only package, offering Africa’s Premier League fans affordable access to 380 live games annually.

Showmax is finalising local partnerships with leading telcos, including MTN South Africa, banking and retail partners to support distribution.

MultiChoice highlighted that Showmax revenues for the year grew by 22% to R1.0 billion, while trading losses increased to R2.6 billion.

While the higher losses are concerning, the company highlighted that it came in below the expected range of R3 billion to R4 billion.

It said some operational expenses and depreciation were shifted into the next financial year. It warned that this will result in incremental trading losses.


This article was first published by Daily Investor and is reproduced with permission.

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DStv owner bets the farm on Showmax