MultiChoice has shown another increase in its overall number of DStv subscribers although the African-based pay-TV operator continues to lose top-end DStv Premium subscribers who are abandoning the most expensive tier that no longer offers enough value for money.
The MultiChoice Group on Tuesday published its annual financial results for the year that ended 31 March 2019, showing that while its overall number of DStv subscribers continue to grow, DStv Premium subscribers continue to decline due to stiff competition from international video streaming services, as well as tough economic conditions putting pressure on consumers' discretionary spending habits.
MultiChoice lost another 100 000 DStv Premium subscribers during its reported financial year.
Overall it grew its pay-TV subscriber base by 12% to 15.1 million subscribers in South Africa and sub-Saharan Africa combined but its percentage of DStv Premium and DStv Compact subscribers in South Africa decreased by 7%.
MultiChoice continues to refuse to break out and make any concrete Showmax subscriber numbers available in its financial results. Showmax as its subscription video-on-demand (SVOD) service, together with its DStv Now service fall under MultiChoice's Connected Video division.
"The South African business delivered subscriber growth of 8% year-on-year or 500 000 subscribers and generated revenues of R33.7 billion, up 3% (4% organic) from the prior year," The MultiChoice Group said.
"The DStv Premium segment remained under pressure as consumers were impacted by rising fuel and other costs and we competed for share of wallet."
MultiChoice said that online services like Showmax and DStv Now performed well and that online subscribers doubled year-over-year thanks to "good uptake".
Because of the ongoing loss of DStv Premium subscribers - MultiChoice's most valuable customers - the ARPU from South African pay-TV customers was once again down. ARPU stands for "average revenue per user".
What the drop in the overall percentage of DStv Premium subscriber numbers in South Africa means, is that MultiChoice is making less average revenue per subscriber.
MultiChoice's "ARPU for South Africa declined from R335 to R322 due to the ongoing change in subscriber mix towards the mass market," the pay-TV operator said that was spin-off from Naspers and listed separately on the Johannesburg Stock Exchange (JSE) at the end of February.
DStv Premium subscribers declined from 22% in the previous financial year to 20% at the end of March 2019. The mid-tier subscribers - DStv Compact Plus and DStv Compact - also showed a marginal decline going from 40% of all overall subscribers to 38% by the end of March 2019.
The low-end subscriber segment - DStv Family, DStv Access and DStv Easyview subscribers - grew from 37% to 42%.
The MultiChoice Group added another 1.6 million pay-TV subscribers across Africa during the financial year and now has a total of 15.1 million pay-TV customers, of which 7.4 million are in South Africa, and 7.7 million are in the rest of Africa outside of Africa.
This is the first time that the "rest of Africa" has more pay-TV subscribers on a combined basis than pay-TV subscribers in just South Africa.
The MultiChoice Group generated R50.1 billion in revenue, an increase of 6%. The pay-TV operator also upped its investment in local content production, and added 4 600 hours of local content to its library to nearly 50 000 hours.
"The spend on local general entertainment content as a percentage of total general entertainment content increased from 38% to 40% in line with the strategy to reach a target of 45%," The MultiChoice Group said.
Twenty new local drama series were produced, while Uganda as part of the "rest of Africa" became the 7th country to launch a TV channel (Pearl Magic) focused on locally-produced content.
Calvo Mawela, MultiChoice CEO, in a statement says "Our growth is exceptionally pleasing, especially in the current economic climate, and a clear indication that our strategy is working. We continue to believe in the growing appetite for video entertainment across the African continent".
In the next financial year MultiChoice said that it plans to "continue its focus on scaling its video entertainment services across the continent, mainly in the middle and mass markets".
Also interesting to note is that The MultiChoice Group will be changing the metric whereby its measuring subscribers for the first time, from the 2019/2020 financial year.
Previously MultiChoice derived the number from active subscribers on the measuring day.
Going forward The MultiChoice Group will report its subscribers numbers as including any customer who had "an active primary/principal subscription within the 90 day period on or before reporting date. This provides a better reflection of the activity of our base," MultiChoice says.
MultiChoice Africa
In the rest of Africa outside of South Africa, MultiChoice Africa grew MultiChoice's subscriber base by 17% year-on-year with 1.1 million subscribers by the end of March 2019.
The pay-TV subscriber growth of both DStv and GOtv subscribers across Africa translated into revenue growth of 13% R14.8 billion while trading losses reduced 19% or R0.9 billion.
MultiChoice Africa's ARPU from pay-TV subscribers fell slightly and stabilised at R159, compared to R160 in the previous financial year. There were currency depreciation in the Angolan kwanza (60%), Zambian kwacha (17%) and the Ghanaian cedi (11%).
MultiChoice also solidified its position in the Angolan market, converted the Angolan operation from an agency to a subsidiary. Business remain tough in Angola and Zimbabwe, where cash balances and trade receivables of R298 million held in Angola and Zimbabwe remain exposed to weakening currencies, reduced 80% compared to the previous year's balance.
Liquidity constraints in Angola however improved, leaving a closing cash position of R168 million.
Nigeria (34%), Kenya (11%), and Zambia (10%) - interestingly also representing the biggest hubs in West, East and Southern Africa (excluding South Africa) remain the biggest revenue drivers for the MultiChoice Africa business.
The rest of Africa combined are responsible for 45% of the revenue earned from the "rest of Africa".
M-Net's Shaka TV series - first key art look
MultiChoice's presentation for its financial year results surprisingly includes the first look at M-Net's upcoming local drama series, Shaka, with the first reveal of key art treatment.
M-Net hasn't yet shared anything with the press about Shaka - if that's to be the new title (or a working title) beyond the original Shaka-Ilembe that was announced as the title in May 2018.
The new Shaka key art includes the new "An M-Net Original" marking that M-Net is now adding to all of its locally-produced TV series to distinguish itself from other productions.
Shaka is produced by Bomb Productions and will start on Mzansi Magic (DStv 161) in the 2019/2020 financial year.
Shaka/Shaka-Ilembe that has been created by M-Net specifically with an eye on global distribution.
The drama series with an initial 12-episode order will revolve around the powers that influenced and shaped Shaka Zulu - the drama unfolding from the time of his conception, his bravery as a young man, the early attempts to kill him and the subsequent years of exile with his mother.
The stylized "Shaka" on the key art also includes a spear pointing from left to right, and also makes use of an amber palette hue, similar to what was used for the 1986 Shaka Zulu TV series from Harmony Gold USA and the SABC that starred the late Henry Cele.
M-Net's Shaka key art comes with the tag line: "A Hero's Journey - From Outcast to King".
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