{"id":621124,"date":"2025-12-03T15:01:18","date_gmt":"2025-12-03T13:01:18","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=621124"},"modified":"2025-12-03T15:02:04","modified_gmt":"2025-12-03T13:02:04","slug":"multichoices-big-strategy-backfires-spectacularly","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/columns\/621124-multichoices-big-strategy-backfires-spectacularly.html","title":{"rendered":"MultiChoice’s big strategy backfires spectacularly"},"content":{"rendered":"\n

MultiChoice’s strategy to make Showmax its growth engine and reach revenue of $1 billion and 16 million active subscribers failed spectacularly.<\/p>\n\n\n\n

MultiChoice has been punting Showmax as a core component of its growth strategy. It budgeted billions to make it the leading streaming service in Africa.<\/p>\n\n\n\n

In May 2023, former MultiChoice executive Yolisa Phahle stated that Showmax was poised to generate R18 billion in net revenue within five years.<\/p>\n\n\n\n

She added that they expected to achieve an earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin of 25%.<\/p>\n\n\n\n

MultiChoice said Africa was the final frontier for subscription video-on-demand (SVOD) growth, which is why many international players are targeting the continent.<\/p>\n\n\n\n

Despite increased competition, Phahle was confident that Showmax could become the leading streaming service in Africa.<\/p>\n\n\n\n

Although Showmax was well behind Netflix in subscribers, Phahle argued they have a competitive edge over their international rivals.<\/p>\n\n\n\n

By partnering with Comcast and through its planned product offerings and pricing, MultiChoice expected a step-change in customer numbers in the future.<\/p>\n\n\n\n

“Speaking to affordability and content preferences of African customers, we expect to have three times more customers than initially envisaged,” she said.<\/p>\n\n\n\n

To facilitate this growth, MultiChoice increased its investment in the Showmax platform and local content.<\/p>\n\n\n\n

MultiChoice expected Showmax to exhibit a similar 3- to 5-year J-curve to its global peers in the streaming industry.<\/p>\n\n\n\n

“We are aiming to generate revenue of more than $1 billion after 5 years, with a trading profit breakeven target in full-year 2027,” she said.<\/p>\n\n\n\n

“We are targeting EBITDA margins of 25% and free cash flow margins of around 20% at scale.”<\/p>\n\n\n\n

To generate this revenue, it will need to have around 16 million active subscribers paying an average of R99 per month.<\/p>\n\n\n\n

MultiChoice was so bullish it stated that the streaming platform would help it reach a combined DStv and Showmax subscriber base of 50 million users by 2028.<\/p>\n\n\n\n

Reality sets in for MultiChoice and Showmax<\/h2>\n\n\n\n
\"\"<\/figure>\n\n\n\n

To achieve these lofty targets, Showmax had to experience exponential growth between 2023 and 2028. This did not happen.<\/p>\n\n\n\n

Showmax was relaunched in 44 African markets in February 2024 with new branding, packages, and plans.<\/p>\n\n\n\n

“We believe now is the right time to double down on Showmax as broadband connectivity and affordability are approaching an inflexion point across Africa,” it said.<\/p>\n\n\n\n

In 2024, MultiChoice spent R1.7 billion in platform advances to customise the Peacock platform for the Showmax instance in Africa.<\/p>\n\n\n\n

It was ready for the rapid growth of Showmax 2.0 following its relaunch and rebranding. However, this growth never materialised.<\/p>\n\n\n\n

Instead of the exponential revenue growth needed to reach its $1 billion target, there was a decline in paying subscriber revenues in the 2025 financial year.<\/p>\n\n\n\n

What was even more painful for MultiChoice was that there was an 88% increase in trading losses in the last financial year.<\/p>\n\n\n\n

The 44% growth in paying subscribers, which included lower-priced packages, was insufficient to increase revenue, and the losses are mounting.<\/p>\n\n\n\n

In the 2025 financial year, Showmax reported trading losses of R4.9 billion, up from R2.6 billion the previous year.<\/p>\n\n\n\n

Many investors raised concerns about the substantial investment required to relaunch the Showmax business.<\/p>\n\n\n\n

They referred to MultiChoice’s R12 billion multi-party term loan facility to fund its working capital and to support the re-launched Showmax business.<\/p>\n\n\n\n

“Lenders are concerned about the impact of the Showmax funding requirements on our loan covenants,” MultiChoice said.<\/p>\n\n\n\n

The company promised to scale the business while managing costs and funding requirements to navigate the investment curve and reach breakeven.<\/p>\n\n\n\n

MultiChoice’s latest results showed that this did not happen, at least not over the last financial year.<\/p>\n\n\n\n

The MultiChoice management team missed its Showmax targets by a country mile. “Subscriber growth and revenues were well short of the 2025 targets,” it said.<\/p>\n\n\n\n

It was clearly time to rethink the Showmax strategy, as the results fell far short of what MultiChoice had promised the market in 2023.<\/p>\n\n\n\n

\n\n\n\n

This is an opinion piece based on MultiChoice’s financial statements.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

MultiChoice\u2019s strategy to make ShowMax its growth engine and reach revenue of $1 billion and 16 million active subscribers failed spectacularly.<\/p>\n","protected":false},"author":23,"featured_media":558689,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_facebook_post_id":"","_sma_instagram_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[21],"tags":[1343,475,2054,32140,23998],"class_list":["post-621124","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-columns","tag-comcast","tag-multichoice","tag-netflix","tag-showmax","tag-yolisa-phahle"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/621124"}],"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\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=621124"}],"version-history":[{"count":2,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/621124\/revisions"}],"predecessor-version":[{"id":621315,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/621124\/revisions\/621315"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/558689"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=621124"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=621124"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=621124"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}