During its 2019/2020 financial results presentation on 10 June 2020, MultiChoice Group announced that it will be adding both Netflix and Amazon Prime Video as options available to its DStv subscribers. The announcement is seen as a signal by the pan African pay-TV operator that it is looking to become a video content aggregator in the long term rather than compete with video streaming services.
Along with this announcement, MultiChoice also stated that they had added 900,000 subscribers o their pay-TV offerings across Africa, DStv, and GOtv, during its previous financial year. These new subscribers brought the total number across all DStv offerings to 19,5 million.
"We are pleased with our performance and the resilience we have demonstrated this year. Our healthy balance sheet positions us well to weather uncertainties in our markets going forward. We have honoured our commitment to shareholders by declaring a maiden dividend of R2.5bn, on top of some R1.7bn in share buy-backs executed during the year," said Calvo Mawela, Chief Executive Officer at MultiChoice Group.
Change of video streaming strategy by MultiChoice?
It appears that MultiChoice has had a change of heart and change of strategy. Not so long ago, the company appeared to view itself as a competitor to the likes of Netflix and Amazon Prime Video.
Previously, Mawela had been very vocal about how as a result of OTT (Over The Top) VOD (Video On Demand) services such as Netflix and Amazon Prime Video, MultiChoice had apparently "lost over 100,000 subscribers in South Africa and the rest of Africa" during 2018 as far as their pay-TV offering, DStv, is concerned. This was odd at the time, and to a certain extent even now, considering that MultiChoice owns a video streaming service of their own, Showmax.
One of the reasons Mawela gave at the time, a valid one at that, was that Netflix and Amazon Prime Video don't pay taxes in South Africa and as such have an added advantage. Now, it seems that reasoning has been abandoned by Mawela and MultiChoice.
More interestingly, does it mean they are also abandoning Showmax in the long term?
A valid question considering the increase in African video content that Netflix has been licensing and comissiong in recent years.
Too little, too late
Let's not be deceived, MultiChoice has a strong hold and a monopoly on the pay-TV market. However, it's latest strategy, becoming a video content aggregator, sounds like something a company worried about its future would do.
Apart from offering less "payment friction", as the company mentioned, by bundling Netflix and Amazon Prime Video as part of its DStv and Gotv subscription offerings, there is little else benefit I see for their customers. At a fraction of the cost of the DStv subscription and paying for monthly Internet access (be it fiber at home or mobile Internet), customers can have the benefit of watching Netflix and Amazon Prime Video and still have Internet access to use for other purposes.
The strategy also appears to be a copy and paste of other pay-TV operators across the world, but in the case MultiChoice, it remains to be seen whether it is too little too late for a business model that has been slow to adopt with the times.
"We have long been a content aggregator, and this is proof of our aggregator model at work – providing simplicity, choice and convenience for our customers. As our industry evolves, we believe that we are well-positioned to benefit from both worlds – a large, growing pay-TV market in Africa, as well as an emerging over-the-top (OTT) opportunity, where our own OTT services and aggregation capabilities can drive success," said Mawela.
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