According to industry reports, MultiChoice is struggling to retain DStv subscribers. Years of price increases have made the service expensive and uncompetitive in the new streaming market.
MultiChoice’s results for the six months ended 30 September 2023 revealed a loss of US$48 million, a big decline from the US$2,9 million profit over the same period last year.
One reason for the poor results is that middle-class South Africans continue to ditch DStv due to a preference for streaming services.
Over the last year, DStv subscriptions in South Africa declined by 486,000 — from 9.115 million to 8.629 million.
What was striking was that the subscriber decrease happened across the board over the last six months. Simply put, DStv subscribers in the premium, mid-market, and mass-market segments are all cutting the cord.
MultiChoice seemed undeterred by declining subscriber numbers and again increased the price of most DStv bouquets on 1 April 2024. The pricing of its DStv satellite pay-TV package increased by between 3.1% and 7.8%. DStv’s streaming-only packages remained unchanged.
Despite price increases last year, mass-market ARPU declined by 3%, mid-market by 2%, and premium by 4%. This means many DStv subscribers are dumping the more expensive packages or downgrading to cheaper options.
The reality is that South African consumers are stretched financially and cannot afford more expensive DStv services.
MultiChoice is pinning its hopes on Showmax to save it from declining DStv subscribers and bolster its financial performance.
Showmax 2.0 — a revamped version of its streaming service—was launched on 12 February 2024. MultiChoice is betting on Showmax to compete with Netflix, Disney+, and Amazon Prime Video to become the leading streaming service in Africa.
Showmax 2.0 was created through a partnership between MultiChoice, Sky, and NBCUniversal’s Peacock. MultiChoice owns 70% of the new service, while NBCUniversal owns 30%.
MultiChoice and NBCUniversal announced they will invest US$177 million in the new Showmax offering during the current financial year. This shows how serious MultiChoice is about competing in the streaming market and taking on Netflix in Africa.
Many of MultiChoice’s focus and resources will go into Showmax, and its satellite service will likely play second fiddle. However, DStv is still MultiChoice’s main revenue stream, and Showmax must achieve incredible growth to match it.
This illustrates how risky MultiChoice’s decision to bet on Showmax is, which has yet to prove that it can be profitable, in preference to its established DStv service.
Competing with global entertainment platforms like Netflix, Amazon Prime Video, and Disney+ is very difficult and resource-intensive.
These players have billions of dollars to invest and create great content. MultiChoice does not have equally deep pockets.
Its only benefits over these platforms are local content and sports. However, MultiChoice has not bundled the full Supersport with Showmax.
Whether local content is enough for Showmax to outperform Netflix and other African competitors remains to be seen.
