by Thinus Ferreira
Cord-cutting is coming for both DStv and Netflix as cash-strapped South African consumers are buckling under the severe Black Swan financial pressure of the Covid-19 pandemic in the country.
Up to a quarter (25%) of traditional pay-TV subscribers in South Africa paying for MultiChoice's DStv and M-Net or StarTimes' StarSat, and almost a third (30%) currently subscribed to streaming services like Netflix, Showmax or Amazon Prime Video, say that they plan to let it go or to spend less on it in a new survey.
The annual Old Mutual Savings & Investment Monitor Report 2020 - this year labelled as a "Covid-19 Special Report" and done during the national lockdown period - is the first survey giving an indication of how shockingly the coronavirus pandemic has changed South African consumer sentiment and anticipated spending patterns.
Not surprisingly, pay-television - meaning traditional subscription TV which has seen a ratings boom during lockdown, as well as video streamers - that until now have appeared unscathed while consumers' financial position deteriorated over the past few months, will experience so-called "cord-cutting" where consumers stop paying for it or decide to cut back what they spend on it.
A lot of existing South African subscribers - begrudgingly - now plan to give up paying for video content, or to spend less on it, as their expendable income evaporates or as fears grow that they might run out of money or income.
The Old Mutual Savings & Investment Monitor Report 2020 survey was done with consumers earning a minimum monthly income of R5000, with over half (57%) who reported a negative effect on their personal income levels ranging from earning a bit less (26%) to now earning nothing at all.
A whopping quarter of all current DStv subscribers (25%) in the survey said that they plan to cut back spending on this compared to before Covid-19, while only 9% who indicated that they plan to spend more on it after Covid-19.
Almost a third (30%) of people who currently paid for video streaming services to watch TV and movie content online like Netflix or Showmax said that they will be spending less on it after Covid-19, while 15% said they would be spending more on it.
Roughly half of South Africans (55%) currently spending money on streaming services said they would continue to spend the same.
Breaking out these statistics further - first for those consumers saying they will be spending less on video streaming - the biggest percentage are in the 30 to 49 years age bracket (31%), skewing slightly more male, and earning between R5000 and R19 999 per month (31%).
For those consumers saying they will be spending less on traditional pay-TV (for instance DStv), the biggest percentage are in the R20 000 per month income group (27%), in the 18 to 29 years age group (27%), and skewing slightly more female.
Although both DStv and online TV streaming services and music streaming services like Netflix, Showmax, Spotify and Amazon Prime Video are luxury services, the Old Mutual Savings & Investment Monitor Report 2020 calls them "priority luxuries".
The report notes that DStv and these streaming services - together with alcohol, cigarettes and e-hailing services like Uber and Taxify - are spending items for consumers where "priority is given to these expenses and they will only be reduced as a matter of last resort".
