Thursday, June 10, 2021

MultiChoice coins it during Covid and grows to 20.9 million subscribers although it continues to shed top-end DStv customers jumping to video streaming.

by Thinus Ferreira

MultiChoice continues to coin it during Covid and saw an ongoing surge in mass-market DStv subscriber growth over the past year with 7% year-on-year growth to 20.9 million active subscribers, although its base of DStv Premium subscribers continues to plunge as these top-end customers are switching away to online video streaming.

The MultiChoice Group released its results for the financial year that ended at the end of March 2021 on Thursday, noting that it grew its 90-day active linear pay-TV subscriber base by another 1.4 million DStv and GOtv subscribers of which 8.93 million (43%) are in South Africa that remains its country with the largest subscriber base, and with 11.93 million (57%) in the rest of Africa (RoA).

Of the 1.36 million new subscribers, about 500 000 were in South Africa, representing 6% growth year-on-year in South Africa.

In South Africa, the base of DStv Premium and DStv Compact Plus subscribers has plunged another 8% from 1.5 million to 1.4 million subscribers. 

The mid-market comprising DStv Compact and DStv Commercial bouquets grew by 3% from 2.9 to 3 million subscribers. 

The biggest growth came in the so-called mass-market bracket - DStv Family, DStv, Access and DStv EasyView bouquets - that increased by 14% from 4 million to 4.6 million subscribers. 

In the rest of Africa DStv's top-end subscribers dropped 10% from 1.2 million subscribers to roughly 900 000.

Similar to Britain's Sky pay-TV operator, MultiChoice and M-Net are pivoting to a new content strategy in South Africa as well as in the rest of Africa (ROA).

The Randburg-based pay-TV operator continues to lessen its spending on acquiring international content and is boosting its production spend on local content and African originals in an attempt to differentiate its content offering from global streamers like Netflix, Amazon Prime Video and others like Disney+, Paramount+ and HBO Max that are not yet, but might launch their subscription video-on-demand (SVOD) services on the African continent in future.

Despite production stoppages and travel restrictions brought about by the Covid-19 pandemic, MultiChoice and M-Net produced 19% more content than during the previous financial year - a total of 4 567 hours. MultiChoice's total local content library now exceeds 62 000 hours, with 42% of the pay-TV operator's general entertainment spend that was on local content.

MultiChoice grew its revenue by 4% to R53.4 billion. 

"The Covid-19 pandemic taught us more about the art of the possible," says Calvo Mawela, MultiChoice Group CEO, in a statement. "We started the year confronted with severe disruptions to our programming schedules, bleak macro-economic forecasts for many of our markets and sharply weaker currencies. In the face of these challenges, our teams rallied together – this helped us deliver on all our key performance metrics."

MultiChoice says that to help manage US dollar-based costs, two major international content agreements and several smaller ones were renegotiated into South African rand (ZAR). 

MultiChoice also launched 11 new local language channels across sub-Saharan Africa, completed 5 new co-productions with global content producers and sold 16 of its series to international buyers.

MultiChoice renewed the rights to the English Premier League (EPL) and UEFA Champions League and also secured broadcasting rights to the FIFA World Cup 2022 in Qatar. On the international content front MultiChoice says that it maintains mutually beneficial relationships with its studio partners, and has successfully added access to Netflix, Amazon Prime Video and YouTube on its DStv Explora Ultra decoder.

MultiChoice says that both advertising and commercial subscription revenues were significantly impacted by the Covid-19 pandemic. 

Advertising revenues were down 34% year-on-year to R0.6 billion at the interim stage but recovered well in the second half as Covid restrictions eased, ending 11% down year-on-year at R2.8 billion.

Similarly, commercial subscription revenues started to recover in the latter part of the financial year but finished 35% lower than the prior year. The hospitality industry is expected to take some time to return to normal trading.

MultiChoice says that Connected Video users on the DStv app and Showmax continue to grow as online consumption increases. According to MultiChoice local content is also a key differentiator on Showmax, with local content viewership that is up significantly during the financial year and with 4 out of the top 5 titles on Showmax that are local productions. 

A record number of Showmax originals were launched during the year, including the first Kenyan and Nigerian original series.

"We are enjoying good momentum and are excited about our prospects for the year ahead," says Calvo Mawela.

"Our advertising business is recovering, and we have plans to further enhance our entertainment ecosystem. We look forward to an exceptional slate of local content and the meaningful return of live sport as we catch up on the events missed in this past year."

"We are however cognisant of ongoing consumer pressure in what remains an uncertain Covid-19 environment, continued macro-economic volatility in our markets and the need to absorb deferred content costs in the new year."

"We will look to counter potential headwinds through tight cost control and by driving operational excellence. Our strong balance sheet positions us well to withstand these uncertainties and deliver value to our customers and shareholders."