by Thinus Ferreira
MultiChoice has shed another 100 000 highly-prized premium DStv subscribers over the past year with customers who no longer see its expensive top-end bouquet as offering enough value for money as they switch to video streaming - an exodus that's also having an ongoing negative impact on the TV ratings share of top-bundled channels like M-Net, Discovery Channel, SuperSport Grandstand and kykNET.
Ironically, the top-channel ratings erosion due to a smaller percentage of premium DStv subscribers having and watching these channels doesn't mean that advertisers will be paying less to reach this ever-decreasing share of sought-after viewers.
MultiChoice continues to lose its most-valuable DStv subscribers - those who pay the most for the most expensive packages in order to access premium entertainment and exclusive sports channels - with the ongoing churn that led to another 100 000 DStv Premium and DStv Compact Plus subscribers who have abandoned these bouquets.
MultiChoice released its latest financial report for the year ending 31 March 2021 that indicates that although its overall pay-TV subscriber base grew thanks to an increase in its mass-market segment, its top-end customer segment in South Africa saw further erosion from 1.5 million to 1.4 million DStv subscribers - representing an 8% decrease.
The biggest growth came in the so-called mass-market bracket: DStv Family, DStv, Access and DStv EasyView bouquets.
This subscriber segment increased by 14% and roughly 600 000 subscribers in South Africa from 4 million to 4.6 million subscribers.
MultiChoice now has 20.9 million active subscribers of which 8.93 million (43%) are in South Africa - that remains the pay-TV operator's country with the largest subscriber base - and with 11.93 million (57%) combined in the rest of Africa (RoA).
ARPU: Top end DStv subscriber revenue keeps falling
While MultiChoice is earning more revenue due to the ongoing growth of its overall DStv and GOtv subscriber base, MultiChoice continues to see a slide in what it makes per individual premium subscriber.
A breakout of MultiChoice's ARPU, or "average revenue per user" from within its latest financial report indicates that the ARPU of its premium subscriber segment taken over the past year shrank further from the 18% that it represented in the 2020 financial year, to 16% in the 2021 financial year.
ARPU from DStv Compact subscribers also slightly decreased from 34% to 33%. For the first time, ARPU from MultiChoice's combined mass-market segment represents more than half of the total - up from 48% in 2020 to 51% in the reported financial year.
Taking the DStv money shot from the point of average monthly subscription fee revenue, the ARPU derived from premium DStv subscribers fell further from R588 per month to R580 - a 1% decrease. The monthly DStv Compact ARPU increased by R3 from R298 to R301 - an increase of 1%.
The monthly ARPU of MultiChoice's mass-market subscribers grew from R88 per month to R95 - an increase of 9%.
Top-channels ratings pressure
Although not mentioned in MultiChoice's financial report, the 8% loss of top-end DStv subscribers translates to yet another 100 000 South African TV households who gave up access to premium TV channels ranging from M-Net and kykNET, to SuperSport Grandstand, Discovery Channel and others.
It means that these exclusively packaged channels are coming under ongoing and increasing TV ratings pressure.
These premium-positioned channels are losing viewers and ratings share - and at a much faster rate with their premium content offering that also costs more to produce - than what lower-tiered TV channels are gaining viewers with content that are not just cheaper to make but that's also the premium content that's later cycled down and scheduled across lower packages.
There is an in-built irony here in that the ratings share erosion of the top-end channels on MultiChoice's offering doesn't yet matter so much because of two still-valid-for-now reasons.
Firstly, as a pay-TV operator, MultiChoice is less dependent on and less worried about ratings (and the ad income tied to those ratings) since its main source of income is derived from monthly subscriber fees that are paid irrespective of whether an individual watches or whether the TV and decoder is never switched on in a month.
Secondly, DStv Media Sales spot pricing for TV commercials (can) remain stable and even increase despite decreases in audience share, since ironically the dwindling top-end audience makes reaching them even more important and desirable to certain advertisers.
To reach that extremely valuable, high-spending consumer segment - although it's a DStv viewer group getting smaller - advertisers are actually willing to spend the same, if not more, in highly-targeted ad campaigns to reach them with their commercial messages.
