Speaking to 702\u2019s Gugulethu Mhlungu, Ferreira explained that DStv subscribers remain the most valuable in South Africa\u2019s TV industry, but there are concerning signs of apathy at MultiChoice.<\/p>\n
\u201cThey are still the most valuable in the TV industry because these are people who are willing to pay money to watch television,\u201d Ferreira said.<\/p>\n
\u201cThey are still valuable but are becoming less valuable because people are switching to lower packages.\u201d<\/p>\n
MultiChoice\u2019s financial statements support Ferreira\u2019s views, showing that the company\u2019s average revenue per user (ARPU) has steadily declined since its 2017\/18 financial year.<\/p>\n
This is despite DStv\u2019s overall subscriber base increasing.<\/p>\n
Stated differently \u2014 the number of DStv subscribers is increasing, but, on average, they are spending less even though MultiChoice increases its fees every year.<\/p>\n
Therefore, DStv is bleeding high-end subscribers that pay R549 or R839 per month (excluding their R110 Access Fee) and only recording a net gain in viewers who pay less.<\/p>\n
This year, for the first time, MultiChoice also recorded a decline in its mid-market segment of 6%<\/strong><\/a>. This was in addition to its 4% loss in premium subscribers.<\/p>\n MultiChoice\u2019s premium segment comprises DStv Premium and Compact Plus, and the mid-market consists of DStv Compact and Commercial.<\/p>\n \u201cIt\u2019s the same as if McDonald\u2019s has 100 people who used to walk in the door and buy a meal and now\u2026 [they] are walking in and just buying a drink or some chips,\u201d Ferreira said.<\/p>\n The following chart shows MultiChoice South Africa\u2019s steady decline in ARPU since March 2017. Netflix\u2019s global launch<\/a><\/strong> was in January 2016.<\/p>\n DStv ARPU. Y-axis truncated to make declines more visible. (Click to enlarge)<\/p><\/div>\n MultiChoice\u2019s decline in DStv ARPU is likely a combination of several factors, including:<\/p>\n Although some subscribers switching to streaming could subscribe to MultiChoice\u2019s Showmax, this would be at a much lower fee of R99 per month.<\/p>\n Unfortunately, it is impossible to plot DStv Premium subscriber numbers over the same period. MultiChoice changed its reporting metrics twice between 2018 and 2020 after Naspers spun the company into a separate JSE listing.<\/p>\n The following chart from MultiChoice\u2019s results presentation shows how its premium market segment declined between 2018 and 2022.<\/p>\n Ferreira explained that it\u2019s easy for a company like MultiChoice that has dominated its market for so long to begin \u201ccoasting.\u201d<\/p>\n It happens gradually at first, and then suddenly, the company is stuck in a rut.<\/p>\n MultiChoice has repeatedly stated that it has adopted a \u201chyperlocal\u201d content strategy<\/a><\/strong> \u2014 producing and delivering local African content in all its markets.<\/p>\n But Ferreira says this isn\u2019t enough for the \u201cdiamonds\u201d of South Africa\u2019s TV industry to pay nearly R1,000 per month for DStv \u2014 there just isn\u2019t enough value for them.<\/p>\n \u201c[MultiChoice] keeps spending money on local content,\u201d said Ferreira.<\/p>\n \u201cBut you would hope there would still be a longing to spend money on premium or prestige content and not just localised Jerry Springer tabloid television-type content.\u201d<\/p>\n DStv’s competitors also aren’t resting on their laurels when it comes to local content either.<\/p>\n Netflix has announced substantial investments in South Africa<\/a><\/strong>, and Amazon Prime Video is adding Afrikaans films to its library.<\/p>\n SuperSport remains DStv\u2019s killer premium offering, but even this faces increasing competition.<\/p>\n Massive multinationals with deep pockets, like Amazon and Disney, are starting to bid on sports rights that have typically been DStv\u2019s domain.<\/p>\n Major sporting leagues are also starting to offer streaming services directly to fans.<\/p>\n MultiChoice\u2019s plan to become a \u201csuper-aggregator\u201d \u2014 offering subscribers a one-stop-shop to get Netflix, Disney+, Amazon Prime Video, YouTube, and other streaming services \u2014 is also a hotly-contended space.<\/p>\n The company\u2019s forthcoming Streama media box<\/strong><\/a> must hold its own against Apple TV, and free software-based services like Plex<\/strong><\/a> and Google TV<\/strong><\/a>.<\/p>\n With competition encroaching on the market MultiChoice has dominated for decades, it faces an existential question:<\/p>\n Can it hold its own? Or will it become a cheap local alternative to its international competitors?<\/p>\n South Africa’s foremost TV expert believes that MultiChoice’s subscribers are becoming less valuable. This is what the data shows.<\/p>\n","protected":false},"author":15,"featured_media":355796,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24],"tags":[723,39088,61855,85,12747,35,475,2054,32140,71636],"class_list":["post-449900","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-broadcasting","tag-amazon","tag-amazon-prime-video","tag-disney-plus","tag-dstv","tag-dstv-premium","tag-headline","tag-multichoice","tag-netflix","tag-showmax","tag-walt-disney-company-africa"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/449900"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=449900"}],"version-history":[{"count":1,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/449900\/revisions"}],"predecessor-version":[{"id":449904,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/449900\/revisions\/449904"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/355796"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=449900"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=449900"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=449900"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/mybroadband.co.za\/news\/wp-content\/uploads\/2022\/06\/MultiChoice-South-Africa-DStv-ARPU.jpg\")
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<\/a><\/p>\n
\nNow read: Netflix and Disney must comply with BEE and pay tax \u2014 MultiChoice<\/a><\/h3>\n","protected":false},"excerpt":{"rendered":"