Thursday, June 11, 2020

EXPLAINER. How and why MultiChoice by adding video streamers to its DStv offering is finally pivoting into becoming a pay-TV Sweets from Heaven.

by Thinus Ferreira

With MultiChoice that is adding two digital streaming services to its broader DStv offering - and likely even more in future - it is signaling that it has decided to now take the same route as other traditional pay-TV services elsewhere in the world and is evolving into what is called a "super-aggregator": In essence MultiChoice is turning into Sweet from Heaven, the TV version.

With the explosion of video streaming services, from global and local services like Netflix, Amazon Prime Video, VIU, Apple TV+, Vodacom Video Play and others already available in South Africa, as well as Disney+ and HBO Max not available yet, the customer or video content consumer has started to quickly become overwhelmed.

The pay-TV operator - in this case MultiChoice - wants to "simplify" this and bring a type of order to the "chaos" of multi-choice.

Imagine this in terms of consumer psychology: You like your very specific dish washing liquid. You buy Sunlight because you are brand loyal for whatever reason.

But beyond buying Sunlight you choose to walk into a Pick n Pay to go get it there because it's convenient, or closest, or cleanest or is cheaper there because of some special offer. Brand loyalty overlaps secondary brand loyalty and ease of use.

MultiChoice wants to be the "place" or become the place - the Pick n Pay if you will - where you shop for your streaming services each with their own icon tiles which you can subscribe and unsubscribe to, paying one monthly bill with one overall amount.

When you walk into a Sweets from Heaven you see multiple transparent perspex boxes with scoops and a whole range of different sweets and candy in all colours, shapes and tastes. You scoop and scoop and scoop and weigh and pay one rand amount, instead of having to buy the sweets at different places, walking everywhere, and doing different transactions.

Not always, but you also likely take more than what you would have buying one type of sweet individually simply because it's there and the human being like the idea of seeing abundance.

By becoming a super-aggregator - aggregating "blocks" of streaming services in the same way as it bundles linear TV channels - MultiChoice is lessening the consumer friction for a viewer to engage with this content: both in finding it, choosing it and paying for it.

Here is the important thing: Within the "paying for TV" ecosystem" MultiChoice wants to control what we call the user experience or the consumer relationship, while the individual streaming service gets the scale - the access to the large group of consumers.

In other words, and again using Sunlight in Pick n Pay: MultiChoice provides and controls the shopping experience and provides the aisle, the shelf (display), the discount or promo and makes it all feel clean, safe and desirable to go there, while the manufacturer of the specific product gets access to a large consumer group and gets to sell more of that product (scale).

Add-ons to take and drop
The link-up between traditional pay-TV operators and video streaming services are win-win for both, which is why operators from Comcast in America, to Sky in the United Kingdom, Canal+ in France and many others who have already added Netflix, HBO Max, Disney+ and other streamers, are racing to tie up more deals with more so-called over-the-top (OTT) services.

These OTT players are what we call "additive".

They don't and can't replace the traditional pay-TV experience, especially when it comes to live sports, news and other so-called "appointment television" that large groups of people watch at the same time, but they "add" more premium and unique content to the overall TV ecosystem - content that viewers want to dip in- and out of.

For the traditional pay-TV operator that has millions of existing subscribers it works to add video streamers because it means the subscriber stays on their platform and continues to flick through their carousel, their user interface and through that pick and choose content to engage with.

Besides rich viewer behaviour data and a cut of the income depending on the individual distributor deal, the pay-TV operator also manages, maintains and keeps the primary viewer experience.

The video streamer also wins and gets access to scale - the millions of people who might sample and sign up and use the service, thereby increasing their revenue and their individual subscriber numbers.

What happens now is that a traditional pay-TV subscribers - just like with a cellphone bill - will choose and add on a monthly basis one or more specific streamers just like with a call-minutes or a data bundle. At the end of the month they pay just one amount going off the bank account, instead of three or four.

Subscribers, in this case a DStv subscriber, will choose Netflix for example, binge-watch a specific buzz-worthy series they've heard about through content discovery, and then unsubscribe. They might also decide to stay subscribed, or even forget to unsubscribe (passive income) - meaning more revenue for both pay-TV operator and the OTT player.

The same subscriber, if they unsubscribe, might next month sample or go to another streaming service for another series on that service.

While the consumer in a sense dip in and out and "curate" their own monthly content stream as they tailor-make and chop and change their own collections, the pay-TV operator smiles and the OTT players smile because everyone get more revenue than what they wouldn't otherwise have gotten.

While the individual consumer matrix within the group changes, every OTT service on the pay-TV platform will have a constant broad group of consumers using it at any given time.

The irony in multi-choice
Don't think it's just grandma with the remote control who is struggling to find her TV story.

Multiple global studies in TV research just the past 3 years have shown that more and more viewers are struggling to find the content they want to watch and what they might be interested in - both on linear TV, but especially with streaming services.

It's also not old people - it's everybody!

Viewers, including young viewers, feel more and more overwhelmed by the growth in choices, the number of services available, and are confused and feeling more and more lost because the astronomical growth in the volume of TV content also leads to more complexity in terms of trying to find and access it.

For the ordinary consumer, having to keep track of, and subscribing separately to several pay-TV or streaming services has become too much and keeps getting worse and getting more difficult and time-consuming. It means that the user experience is poor.

Now, a lot of the different keys that unclock different things in your "viewing home" are starting to be placed back on one key chain again.

By becoming a super-aggregator the traditional pay-TV services, like MultiChoice, offers the shop and the shelf, can provide a search and recommendations functionality, can track user viewing behaviour and offer a single point of billing in a single currency.

Welcome to the start of South African pay-TV's Sweets from Heaven era.

ALSO READ: MultiChoice to add Netflix and Amazon Video Prime as video streamers, now reaches 19.5 million subscribers.
ALSO READ: MultiChoice wants to be a ‘one-stop shop’ for TV content, next DStv Explora will provide access to Netflix, Amazon Prime Video OTT streamers.
ALSO READ: This is how MultiChoice changed its 2019/2020 financial results presentation in which it first revealed that it is adding Netflix and Amazon Prime Video ... and then deleted and altered its presentation.