MultiChoice to merge digital assets as OTT race intensifies

Facing the heat in the over-the-top (OTT) space, pay-TV giant MultiChoice is looking to consolidate its digital assets.

This emerged from the company’s maiden integrated annual report as a newly-listed company. MultiChoice listed on the Johannesburg Stock Exchange in February.

MultiChoice caters for the entire spectrum of the video entertainment market, from the mass to premium segments, including multiple-genre viewing preferences.

OTT video services, which are transmitted via the Internet without requiring users to subscribe to a traditional cable or satellite pay-TV service, are growing rapidly across SA and the rest of Africa.

“Our customer-centric approach ensures we operate a comprehensive video entertainment ecosystem that comprises traditional pay-TV, OTT and other products, such as movie rentals and music streaming,” the company says.

It notes the competitive landscape continues to grow, with global players such as Netflix, Amazon Video, Facebook and iFlix offering alternatives in its territories.

In addition, local streaming players like Cell C black and Vodacom VideoPlay have emerged, it says, pointing out that a significant differentiator for MultiChoice South Africa is the advanced functionality of the DStv Explora.

According to MultiChoice, the latest Explora model supports better video-encoding technology and enhances convenience.

“Our Showmax service is also available via an Internet-connected Explora at no charge for premium subscribers, while all other customers can add the monthly Showmax subscription to their DStv bills.”

It notes OTT is a growing trend in the video entertainment market globally, with more and more consumers shifting to on-demand viewing on multiple devices.

The company explains that a key driver is the convenience for the viewer to choose what and when to watch, which in turn is enabled through faster and more affordable broadband, in combination with an increased number of connected devices such as smart TVs, game consoles and smartphones.

MultiChoice is observing these same developments in a few African countries. However, it says these trends are not prominent across Africa yet, largely due to low penetration of fixed broadband.

While fixed broadband penetration is projected to remain low compared to the rest of the world, the pay-TV operator says connected smartphone and mobile broadband penetration is increasing rapidly.

“So, while the OTT market is gaining traction especially over mobile networks, and opens up new revenue streams for the group, the traditional pay-TV market will continue to grow across our markets, particularly in the mid- and mass-market segments.

“To capture the growing OTT market, we have over the past few years built a compelling offering in response.”

This includes DStv Now, a complimentary service for DTH subscribers, and Showmax, the company’s standalone subscription video-on-demand (SVOD) service.

“We also established the connected video business unit with the aim of consolidating our digital assets (Showmax and DStv Now) and executing on our strategic objective to be the leading online viewing destination in Africa.

“During FY2019, we strengthened our OTT catalogue through closer partnership with our traditional pay-TV business, and the introduction of more first-run, exclusive-to-Showmax titles such as The Girl from St Agnes. Our online platforms are gaining traction and during the year, we doubled the number of monthly active subscribers across our online offerings.”

MultiChoice’s competitor in the OTT space Netflix recently missed its forecasts across all regions and lost US customers for the first time in eight years.

The streaming giant had forecast a gain of 300 000 subscribers during the second quarter – April to June – but instead it lost about 130 000 customers in the US market.

Market research firm Parrot Analytics recently conducted its Global Television Demand Report Q1 2019, which also gives details about SA’s SVOD market.

According to the report, the demand share for Netflix originals is 67.9% in SA. It adds this is not only the largest share within the market, but also the largest Netflix share across all markets in this report.

Contrasting that, the demand share for Amazon Prime Video originals in 2019 Q1 of 9.2% is second smallest across the markets, after Belgium, says Parrot Analytics.

“Our SVOD market demand report is based on the local audience demand in South Africa, for digital original shows,” says Samuel Stadler, VP for marketing at Parrot Analytics.

“That is multi-episode series where the most recent season was produced, or first made available on a streaming platform. To be clear, our report is based on demand data for South Africa for SVOD originals, only.”

“By this measure, Netflix holds over 65% of the market in Q1, 2019. There are other established studies that have attempted to estimate subscribers, for example, via Variety. Parrot Analytics’ approach bases our SVOD market share growth rates on globally standardised TV demand data – which also makes market-to-market comparisons viable,” Stadler explains.

The market analytics frim believes both Netflix and Showmax offer significant value to users. “For example, Netflix Originals are clearly resonating in South Africa, while Showmax has secured the rights to some compelling international content,” Sadler concludes.