MultiChoice is losing subscribers at the very top - its most valuable customer base - because consumers no longer see the expensive DStv Premium offering as providing value for money.
So says the academic and senior lecturer, Musawenkosi Ndlovu, an associate professor in media studies in the Centre for Film and Media Studies at the University of Cape Town (UCT).
For the first time ever in South Africa, MultiChoice will not be increasing the monthly subscription fee in 2019 for DStv Premium subscribers as the pay-TV operator tries to stem the churn and tide of South African consumers rapidly abandoning DStv Premium that's no longer offering enough value for money.
MultiChoice is now also taking away DStv Premium subscribers' print magazine worsening the content discovery process and its customers try to find out what is on DStv and showing where, with MultiChoice that has also constantly been diluting the DStv Premium offering the past few years by not giving these subscribers enough additional services and premium content.
In addition, MultiChoice has been downwards enabling a lot of the add-in services like Naspers' streaming service Showmax and other TV channels over the past two years that previously were for DStv Premium subscribers only and opening multiple premium TV channels for marketing purposes to lower-tiered subscribers in "open window" promotions.
While DStv subscribers are paying more, MultiChoice is actually making less and less per individual DStv customer because of this ongoing drop in its most valuable payers: the DStv Premium subscribers.
The term for this is ARPU, or "average revenue per user". For the 6 months to 30 September 2018 MultiChoice's ARPU fell 3% from $27 (R347) a year ago to $25 (R335) currently.
South African consumers who can pay for television and have a high disposable income no longer want DStv Premium with Calvo Mawela, MultiChoice Group CEO, that in 2018 blamed Netflix South Africa for the significant drop in DStv Premium subscribers.
Calvo Mwela said that the global video streaming giant has been the cause of the loss of over 100 000 DStv Premium subscribers in MultiChoice's previous financial year, including another 40 000 in 2018.
Musawenkosi Ndlovu was interviewed on Saturday morning by Africa Melane on his Weekend Breakfast with Africa Melane show on the CapeTalk radio station.
Asked if DStv Premium is good value for money, Musawenkosi Ndlovu said "that's why people would stop consuming your product - not necessarily because it is expensive, but only because they no longer see the value for money. That's why MultiChoice is losing subscribers at the very top."
"So what is going to happen is, MultiChoice is going to offer the very same content but relatively cheaper. DStv has received a lot of criticism because of repeats, because of older content - people want newer content, they want good content, and they want it wherever they are."
"The consumers where MultiChoice is growing are basically of the view that they're getting value for money. The consumer at the top feels that a premium package that is R50 short of R1000 is not value for money."
"So MultiChoice is facing a situation where the consumer is saying DStv Premium is not value for money, there are competitors who are able to offer me something of a similar kind or better, relatively cheaper."
Musawenkosi Ndlovu said it's not true that MultiChoice will be completely taken over by video streaming service rivals like Netflix South Africa and others, where consumers simply switch en masse to fibre broadband lines into their homes to stream and download huge quantities of shows.
"If you look at the entirety of the South African topography, you may not have fibre optic rolled out to everywhere. That's where the DStv advantage is; satellite can cover vaster areas of the globe than the other alternatives."
On the looming possible changes to sports rights regulations in South Africa that will have a massive, devastating impact on MultiChoice and the collection of SuperSport channels carried on DStv that stand to lose showing exclusive sports content if the current draft regulations become law, Musawenkosi Ndlovu said "if DStv competitors were to get the rights to the English Premier League (EPL), I tell you, this will be the end of DStv as we know it".
"It will have to hold on to some of the rights that give it a certain exclusivity and allow it to be able to dominate the market as it has been for quite some time."
Musawenkosi Ndlovu, asked if he has DStv, said he lives in two places and has DStv in the city but the competitor in KwaZulu-Natal "because with respect to DStv I get what it offers me at 55 percent less".
