Analysts believe MultiChoice needs to exploit its local presence and develop more innovative customer acquisition strategies to fend off market disruptors such as Netflix.
Last week, MultiChoice decried increased competition from technologically advanced “unregulated OTT [over-the-top] platforms” saying: “The video entertainment sector is seeing a rapid evolution with a growing number of players that have entered the industry.”
In the same week, during the presentation of its maiden financial results, the company claimed the combined number of Showmax and DStv Now subscribers was 1.6 times more than those of Netflix, in the markets in which MultiChoice operates.
While Netflix does not report on its subscriber base in SA, Statista projections show Netflix will have more than 337 000 subscribers in SA in 2020.
It now appears that even though MultiChoice claims to be bigger than Netflix in its markets, this has not been enough for the pay-TV giant to stave off the impact of increased competition.
In a turn of events, on Friday, MultiChoice revealed plans to retrench over 2 000 employees, citing competition from other OTT platforms as the catalyst for the decision.
“This has not been an easy decision to make but, in a business driven by advancing technologies, we must continue to drive efficiencies yet be agile enough to adapt to evolving customer needs to ensure that we remain relevant, competitive and sustainable,” said Calvo Mawela, MultiChoice Group CEO.
Analysts, however, think MultiChoice should consider entering into new content partnerships to grow its streaming services, and increase the attractiveness and uptake of Showmax, to remain competitive.
Nozi Dikgale, a researcher and media analyst at Africa Analysis, acknowledges the prevalence of new players in the video entertainment sector, but believes MultiChoice’s experience in doing business in Africa gives the company an edge over competition.
“We believe there will always be an element of free video content offered in the market, as some companies offer free video content to draw viewers to their site. Therefore, video is the bait that brings eyeballs to a site. The revenue generated from other services will fund the provision of free video content. The key issue is the quality of the video content that is used to draw in eyeballs to the site.
“MultiChoice already has a track record of investment in local content. In the past year, MultiChoice increased its investment in local content by 2%. MultiChoice will also need to exploit their local presence and develop more innovative customer acquisition strategies to fend off market disruptors such as Netflix,” Dikgale adds.
Mawela told ITWeb that MultiChoice is “aware of the changing competitive landscape, particularly in OTT. We believe we are well positioned due to our compelling content (local and international general entertainment and sports content); strong partnerships (telcos, distributors); well-developed payment solutions and competitive pricing; and comprehensive coverage of connected consumer devices, and investment in engineering capabilities and software development.”
Petri Redelinghuys, founder of Herenya Capital Advisors, also cites content as MultiChoice’s unique proposition and the trump-card to fend off competition.
“There will always be a market for good quality video content. As long as the content is of good quality, people will buy. MultiChoice must push for a strong streaming presence. MultiChoice can create content for Africa that Netflix cannot."
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