Pay-TV giant MultiChoice is witnessing more of its customers accessing third-party streaming services such as Netflix and Amazon Prime Video via its DStv platform.
So said Nyiko Shiburi, CEO of MultiChoice South Africa, in a wide-ranging e-mail interview with ITWeb.
The interview followed the video entertainment company delivering strong results for the year ended 31 March.
With R53 billion in revenue, MultiChoice increased its 90-day active subscriber base by 1.4 million to reach 20.9 million households, split between 8.9 million in South Africa and 11.9 million in the rest of Africa (ROA). This represents an accelerated 7% growth year-on-year.
The revenue boom came amid the pay-TV operator facing stiff competition from over-the-top (OTT) players such as Netflix. Over the years, the group also experienced a decline in its premium subscribers.
To fend off the competition, MultiChoice has been harnessing the power of technology innovation to up its game.
As more consumers left the pay-TV giant for video-on-demand services, last year, MultiChoice announced partnerships with Netflix and Amazon Prime Video, to make the offerings accessible through its DStv Explora Ultra decoder.
“At MultiChoice, we aim to create a one-stop entertainment ecosystem for our customers, and the onboarding of Netflix and Amazon Prime is just one of the many customer use-cases we are targeting with our approach,” says Shiburi.
“We see an opportunity to continue our aggregator journey by broadcasting and streaming our own local, international and sport content, and by making third-party streaming services available through our platform. Netflix, Amazon Prime Video and YouTube appear to be well-received and customers have started accessing these services via our platform.”
Apps to add more
While it is early days, Shiburi notes the pay-TV operator is excited about other services it will be onboarding.
“Convenience and unified billing are the primary value proposition to consumers, but the creation of a platform as part of a broader ecosystem is exciting for us, as we can pull in complementary apps over time. In doing this, we aim to enhance the customer relationship, provide simplicity, convenience, and a more comprehensive offering to customers to improve retention.”
According to Shiburi, the OTT market continues to develop, with Showmax and Netflix having gained momentum during the year.
He points out there is still a substantial overlap in OTT customers – roughly 83% of Netflix’s subscribers are also DStv subscribers.
“We continue to differentiate ourselves through our investment in local content and sport. Shifting consumer preferences and technological advances are driving changes in the way video entertainment services are provided and consumed. We have harnessed the power of technology to introduce the new Explora Ultra set-top box, with its range of features that allow users to seamlessly access their preferred content in one easy-to-use environment.
“The onboarding of Netflix, Amazon Prime and YouTube provides consumers with an expanded choice of content, ease and convenience of subscription and payment.”
With OTT services threatening the MultiChoice business, over the years, the company has been calling on the South African government to regulate the industry.
Says Shiburi: “We are calling for regulatory parity, in that content service providers ought to be regulated in the same manner.”
This, as the Department of Communications and Digital Technologies published a draft white paper on audio and audio-visual content services last year.
Among other regulations, the draft white paper proposed to widen the licensing and regulatory framework to include new streaming services.
“We welcome the department’s initiative to renew South Africa’s audio-visual policy. We have participated constructively in this process since it started,” Shiburi notes.
“As you know, we operate in a dynamic and constantly changing global environment. While we support this initiative, our submission calls for the proposed policy framework to be simplified, agile and forward-looking.
“Our industry is highly competitive and needs a flexible, lighter-touch legislative approach to allow service providers to respond and adapt quickly to the constantly changing entertainment landscape. The legislative environment needs to provide sufficient flexibility to enable innovation where a range of services can thrive.”
Changing viewing habits
MultiChoice is also eagerly awaiting the country’s years-long delayed digital migration project to be completed.
ITWeb recently reported that over three million South African households still need to migrate to digital terrestrial television (DTT).
When the country switches to DTT, it will make radio frequency spectrum available, which is currently occupied by analogue services for other broadband and broadcasting services. Mobile operators are also eager to see the full implementation of the project, as this will unlock the necessary spectrum they have long been calling for.
“We support digital migration given the release of spectrum for broadband. M-Net completed its digital migration, and we now await the switch-off by other broadcasters so we can start the process of restacking,” Shiburi says.
“We have worked closely with government, sharing the lessons we learnt from the M-Net switch-off process and assisting with identifying local installers through our installer database. We are invested in DTT in SA and ROA, and we will continue to assist in the migration project, specifically the migration of non-subsidised households.”
According to Shiburi, the major trends impacting the video entertainment industry are changing consumer habits when it comes to viewing video content and increased broadband/internet connectivity, which is driving change.
He explains the proliferation of smart, connected devices, the rise in fixed and mobile broadband penetration and speeds (such as 5G), and a steady decline in the cost of these products and services, are meaningfully impacting consumer behaviour.
In the video entertainment environment, he says, access to acceptable quality broadband typically results in a change in consumer behaviour, as it leads to increased viewing with the benefits of on-demand consumption that is more personalised, often cheaper, and offers location and device independence.
However, Shiburi points out that broadband penetration, affordability and connectivity remain significant challenges in most of the markets, while satellite remains the most cost-effective and efficient means of distributing long-form video content at scale to the mass market across Africa.
“Therefore, we see ample opportunity to scale our core pay-TV business. In Africa, as in many parts of the world, OTT is expected to ultimately compete alongside traditional pay-TV and we are starting to see some evidence of this shift.
“While the promises of 5G are compelling in terms of speeds, latency and number of connected devices, 5G networks will typically need significant investment in network upgrades and densification, and will likely have a footprint that initially services that segment of the population already able to access fixed broadband.”
Double focus
On future plans, Shiburi says subject to a stable regulatory environment and the unknown impact of the COVID-19 pandemic, the group will continue scaling its video entertainment services across the continent, focusing on both traditional linear broadcasting and streaming services.
“In addition, we plan to further increase our investment in local content to a target 45% of total general entertainment spend and pursue new growth opportunities that will enhance customer experiences and revenue prospects.”
He notes the company is excited about prospects for the year ahead. “Our advertising business is recovering, and we have plans to further enhance our entertainment ecosystem. We look forward to an exceptional slate of local content and the meaningful return of live sport as we catch up on the events missed in this past year.
“We will look to counter potential headwinds through tight cost control and by driving operational excellence.”
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