Tuesday, June 27, 2017

MultiChoice close to touching 12 million African pay-TV subscribers in 2017 as share of top-end DStv Premium subscribers continues to decrease and growth comes from lower-tiered bouquets.

Pay-TV operator MultiChoice is within reach of 12 million pay-TV subscribers across Africa with its subscriber base that added 1.5 million DStv and GOtv subscribers to top 11.9 million although the bulk of the subscriber growth is now coming from lower-tiered, cheaper bouquets.

On Friday afternoon Naspers released its annual financial results for the year until 31 March 2017 that revealed that its pay-TV business MultiChoice added another 625 000 DStv subscribers in South Africa in the past year (11% growth) to reach 6.36 million households.

In addition, MultiChoice experienced its highest net DStv subscribers growth ever over a 6-month period, and increased its spending 13% on TV programming and production costs that's paid in dollar.

It means that South Africa with over half of all MultiChoice's pay-TV subscribers in one country, remains MultiChoice's biggest pay-TV and DStv market in Africa by far, despite ongoing erroneous articles mistakenly citing countries like Nigeria as being the largest.

Naspers says its South African direct-to-home (DTH) pay-TV business delivered a "solid all round performance".

Sadly the plunge in Nigeria's currency has been debilitating on the entire MultiChoice Africa operations - a gaping black hole that led to a whopping $358 million trading loss and that wiped out MultiChoice's operational progress in lowering costs and streamlining operations.

It will likely take a couple of years for MultiChoice in Africa to return to profitability.

While the number of DStv subscribers are growing, the share of DStv Premium subscribers - the top-tier of users subscribing to the most expensive bouquet - is once again shrinking and continuing to contract, now down to 16%.

While mid-tier DStv Compact subscribers are remaining stable at 27%, the share of subscribers paying for lower-tiered bouquets is now the fastest growing, increasing its share from 53% to 57%.

PVR users in South Africa and across Africa growing fast
MultiChoice's streaming and catch-up service, DStv Now, is "gaining excellent traction" as available TV channels added to this service, and users grow, Naspers said.

Elsewhere in Africa, MultiChoice's digital terrestrial television (DTT) service, GOtv, is already profitable in four African countries. Overall GOtv is inching towards profitability, with MultiChoice that now has 3.001 million DTT subscribers in Africa.

In South Africa MultiChoice saw a 10% growth in the number of DStv subscribers, compared to 2016, who have and use its personal video recorder (PVR) decoders. With this bigger PVR use, the average revenue per user (ARPU) for PVR decoders in South Africa increased by 2% in 2017.

In the rest of Africa the growth of PVR decoders by DStv subscribers have been even more phenomenal - a whopping 26% jump, although the ARPU in the rest of Africa declined by 23% in the financial year.

MultiChoice is responding to increased content costs by removing and renegotiating non-essential TV content.

MultiChoice focused on "bouquet restructuring and reduction of non-performing content, holding subscription prices steady in key markets, better customer focus and retention, reducing set-top box prices and rightsizing operations".

Naspers' subscription video-on-demand (SVOD) service, ShowMax, completed its first full year of operations and is now fully localised in South Africa, Kenya and Poland.

Consolidated development spend for Naspers' video entertainment segment was $102 million compared to 2016's $85 million - up 20% year-on-year (YoY).

Naspers says increased investment in ShowMax was offset by scaling of the GOtv DTT platform.