As it continues to see a decline in pay-TV viewership in South Africa as a result of load-shedding, MultiChoice is calling for more regulation of global streaming service giants, such as Netflix.
Over the years, the video entertainment company has called for a “level playing field” with the international video-on-demand players it competes with on South African turf.
It says global players are not subjected to the same regime when it comes to paying taxes and requirements to boost the local entertainment industry by promoting locally-produced content.
In a recent interview with ITWeb, Calvo Mawela, MultiChoice Group CEO, reiterated his calls for South African regulators to set comparable parameters for the likes of Netflix.
“There are some things that they are paying now – I think VAT [value-added tax] is one of them. However, there are still other regulations that we are subjected to, which they aren’t, which leaves it still an uneven playing field,” Mawela said.
Netflix recently said since 2016, it has invested over R2 billion in local South African content and talent. It added that during the 2022 4th Annual South African Investment Conference, it committed to investing more than R900 million in the local audio-visual sector.
Professor Madeleine de Cock Buning, Netflix vice-president for public policy for EMEA, says the company has so far created more than 7 000 jobs in the country.
She recently encouraged the South African government to cut the red tape to access the film incentive and described the regulatory environment as “challenging”.
Meanwhile, the Copyright Amendment Bill proposes a royalty payment system for video streaming services in South Africa.
The legislation aims to promote the economic interests of creators whose works are increasingly being shared with audiences through newer technologies, such as streaming.
Netflix argues the law could have a negative impact on the local film industry by potentially hindering the ability of producers, authors and performers to choose from different types of remuneration – such as upfront lump sum payments.
At a disadvantage
Nonetheless, Mawela added: “We still call on regulators to level the playing field to make sure we are not overburdened by regulations; whereas they [Netflix] are still having a free ride. We are saying to them: don’t get us to fight with one hand tied behind our backs. They must make sure we are on the same level and can compete effectively in the market.”
Mawela’s calls come after the DStv operator, in its latest results, stated it lost about 140 000 pay-TV subscribers at the end of March. It blamed load-shedding for the loss.
This saw the company post revenue of R35 billion, down 2% year-on-year in South Africa, affected by a 3% decline in subscription revenue.
On the flip side, the video entertainment firm saw positive growth in its connected services, such as the DStv Now app and streaming service Showmax.
According to the firm, the number of DStv app and Showmax users continues to grow, as online consumption increases, supported by rising broadband connectivity and more affordable pricing.
The group’s overall online user base increased by 12% year-on-year, with the growth rate for paying Showmax subscribers at a “strong” 26%.
“Despite the challenges of load-shedding, the other places where we have been driving people to view our content was to encourage them to charge their devices, like tablets, smartphones and laptops, for them to be able to continue watching DStv Now as load-shedding hits,” Mawela told ITWeb.
“We have seen more and more people using their tablets and mobile phones in order to watch our content.”
He added the company has strengthened this drive by improving the user interface of its DStv app.
“We also know that with the partnership with Comcast, viewership is going to improve on what it is today based on the capacity they have in terms of engineers, products and so forth. There are many learnings from the markets they operate in, which will see a significant improvement on our side.
“However, we have been able to improve our content line-up, especially on local content, which keeps on coming on a day-to-day basis.”
Dividend question
The wide-ranging interview also focused on MultiChoice’s milestones since it listed on the Johannesburg Stock Exchange in 2019.
“I think we have delivered on our promise to the market. We have constantly paid dividends ever since we listed on the Johannesburg Stock Exchange. This year is the first time when we are saying we see an opportunity to invest − and with the relaunch of Showmax, we think it’s an opportunity for us.”
In its results, the company said no dividend was declared by the board “due to a cautious outlook on currencies in South Africa and Nigeria, a challenging environment in South Africa, exacerbated by the energy challenge and an anticipated increase in investment in Showmax”.
However, Mawela is buoyant as to the company’s prospects, saying: “We also think that Africa is at an inflection point, where broadband prices in most markets are getting to less than $1 per gigabyte, and that’s where the opportunity for growth in streaming is going to come from.
“With partnerships with the likes of Comcast, we should be able to see big growth coming from the streaming platforms. That’s why we are doubling down on our local content. We have already announced this new product will be underpinned by the English Premier League, which is one of the most popular sports offerings that we have.
“We should be able to have a compelling product in the market and be able to deliver returns for shareholders. That’s why we are being conservative by saying there is still a lot of uncertainty in the market, and we would rather hold on to the dividend for now while we focus on investments.”
But circumstances are changing quite quickly on the African continent, he noted. “If you look at Zambia, after the changing of government, immediately their currency stabilised and even improved and load-shedding disappeared.
“We have seen the same thing happening in Angola, where just by allowing the market to dictate the currency status, we saw the forex needs that we used to have in that country almost disappearing. So, things can turn very quickly − and in South Africa, if this two weeks of improvement in load-shedding continues, we might be on to something.
“Lastly, we have delivered on return on investment in the rest of Africa to profitability. When we came into the market, people did not believe we will turn this ship around and deliver profits – R900 million profits, which is a 4% margin on a year that we had just promised to break even. That demonstrates we are on the right track.”
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