by Thinus Ferreira
After 25 years MultiChoice is testing breaking up its combined entertainment and sports channels offering and unbundling it - through offering DStv subscribers a much cheaper, yet still premium collection of entertainment TV channels in a so-called "skinny bundle", now sitting alongside an optional add-on package of sports channels.
If MultiChoice does break up its existing DStv pay-TV bundle by spinning out sport into optional, separate, add-on TV packs it would represent the biggest structural change to its value bundling and the packaging of pay-TV content in Africa in a quarter of a century.
As part of a new possible DStv bouquet structuring plan, MultiChoice is looking at allowing DStv subscribers to choose their sport channels - the most expensive content - separately in the form of 3 different, optional, add-on sports packages each containing various bundled SuperSport and ESPN channels.
The Randburg-based operator is facing growing pressure and pay-TV competition from global video streaming services like Netflix and Amazon Prime Video in its own backyard - with several more like Disney+, HBO Max, Discovery+ and Paramount+ set to be introduced in Africa in the future.
As a result, MultiChoice has now been testing a dramatic package unbundling and asking feedback from potential pay-TV customers about a radical DStv restructuring option that it is calling "DStv Flex" and that would function as a less bloated, so-called "skinny bundle".
MultiChoice spokesperson Sbu Mpungose didn't respond with answers to a set of questions in a media enquiry made about DStv Flex and that includes questions about MultiChoice's consumer research being done into the unbundling of its sports content.
The aim of "DStv Flex" is to try and keep highly-prized DStv Premium customers within MultiChoice's subscriber base - a fast-dwindling top-end subscriber segment - and to try and limit the growing churn of premium DStv subscribers.
MultiChoice executives now think that there are very likely enough potential premium DStv subscribers in South Africa who are not interested in paying for sports channels - for instance, consumers who have jumped to Netflix SA but who would likely remain subscribed, or return to, a DStv Flex entertainment pack of R299 per month filled with premium TV channels and that would offer premium general entertainment content only.
If consumers stay subscribed to a sport-free and therefore cheaper yet still premium package, MultiChoice would also start to stem the ongoing TV ratings erosion of premium pay-TV channels like M-Net, Discovery Channel, kykNET and others.
As more and more subscribers abandon MultiChoice's expensively priced DStv Premium and DStv Compact Plus packages, these individual premium pay-TV channels that were already pulling in smaller audiences than mass-market channels on lower bouquets, have been experiencing further viewership declines as their potential pay-TV audiences keep shrinking.
This is something that will eventually start to negatively impact DStv Media Sales ad rates for these premium-packaged channels and MultiChoice's advertising revenue as well.
Flexibility to finally pick-and-choose DStv how you want
As part of new market research, MultiChoice has been directly targeting potential pay-TV consumers, like former DStv Premium subscribers who have left, asking their opinions in a set of questions.
MultiChoice wants to know if they would return to DStv and a possible "DStv Flex" subscription that would consist out of a basic entertainment pack priced at R299 for premium content, with sports and movies as optional add-on packages.
MultiChoice wants to know if former DStv Premium subscribers feel that DStv Flex, together with the various optional sport add-on packages are structured enticingly enough.
With DStv Flex, subscribers would get a compulsory entertainment TV channels package consisting out of 64 linear TV channels for R299.
This would include M-Net, kykNET, 1Magic, Mzansi Magic Moja Love, Comedy Central, FOX, BBC Brit, BET and 10 more channels; movie channels like M-Net Movies 3, M-Net Movies 4, TNT and Studio Universal; as well as kids channels like Cartoon Network, Disney Channel, Nickelodeon and 4 more.
The basic DStv Flex pack would also include documentary and lifestyle channels like National Geographic, History, Food Network, Discovery Channel and 3 more; News channels like eNCA, CNN International, Sky News, SABC News and 3 more; music and religion channels like MTV, Trace Urban, Channel O, 1Gospel and 5 more; as well as free-to-air channels like e.tv, SABC1, SABC2, SABC3 and 7 more.
To this entertainment pack, MultiChoice, for the first time ever, would offer sport as an add-on in the form of three different sport packs that could be switched on in any month, and that could be cancelled and removed from the basic subscription from month-to-month as a subscriber wants to.
There would be Sport pack 1 for R349 per month that has football and all other sport besides rugby and cricket, Sport pack 2 for R349 per month that has rugby and all other sport but not football, and Sport pack 3 for R499 per month that has all sports similar to what DStv Premium currently offers.
Sport pack 1 will have the SuperSport channels of EPL, PSL, Football, Golf, Motorsport, Action, La Liga, Tennis, Variety 1-4, as well as ESPN and ESPN2.
Sport pack 2 will carry the SuperSport channels of Rugby, Cricket, Motorsport, Action, Golf, Tennis, Variety 1-4, and ESPN2.
Sport pack 3 will have the SuperSport channels of Grandstand, Rugby, Cricket, Action, PSL, Motorsport, Football, La Liga, Golf, EPL, Variety 1-4, Tennis, as well as ESPN and ESPN2.
DStv Flex subscribers would also get the option to bolt on the existing, optional Add Movies package for R99 per month that has the M-Net Movies 1, M-Net Movies 2 and fliekNET channels.
DStv Flex subscribers would be able to stick with just the basic entertainment package of 64 TV channels, add any of the three sports packages if they want, have the option to add just the movies package, or would be able to add both a sports package and the movies pack.
MultiChoice wants to know from former DStv subscribers whether they feel that the sport add-on's appeal enough to different types of sports lovers, for instance, soccer fans and rugby fans, or why not.
MultiChoice also wants to know how likely a DStv subscriber would be to add on one of the sports packages if they are offered as an optional add-on to a basic subscription.
If sport is spun loose
Until now MultiChoice has been adamant that it's not possible to extract and spin off its SuperSport content from its existing, tiered and bundled DStv packages.
However, overseas pay-TV operators, like Sky in the United Kingdom, have realigned their bundled pay-TV content and spun out sports content as separate add-on packages.
Sky for instance now offers Sky Signature as a basic entertainment package for £27 (R537 per month), to which subscribers can add one or more TV packs like Sky Sports (£20/R397), BT Sport (£27/R537), Sky Cinema (£11/R219), as well as streamers like Netflix and Disney+.
MultiChoice could likely follow suit with a similar plan since it would align perfectly with its new strategy of pivoting to become a so-called "super-aggregator".
MultiChoice is fast reshaping its traditional direct-to-home (DTH) satellite pay-TV business into becoming a platform for not just traditional linear TV channels but also over-the-top video streaming services like Showmax, Netflix and others.
MultiChoice is busy building out a new "bundle" of pick-and-choose services where the consumer is offered a "superstore"-carousel of TV choices - something that is putting increasing pressure on its existing traditional model of limited DStv packages that are no longer aligned for the binge-watching video streaming era where pay-TV consumers are seeking out specific shows instead of channels.
With the release of its latest 2020/21 financial results, Calvo Mawela, MultiChoice Group CEO, said that sport - especially rugby and more precisely the lack of rugby during the last year because of the global Covid-19 pandemic - is the biggest driver behind DStv subscribers who are abandoning its premium bouquet offering.
MultiChoice's new calculus is premised on the idea that if sport, and rugby as a content subset, were a separate add-on package, then at least some DStv subscribers would choose to remain subscribed to a basic entertainment package during the part of the year when certain sports or championships are out of season and not taking place.
Subscribers would just cancel the sport add-on and keep the rest of the premium bouquet of general entertainment content - instead of leaving entirely or downgrading to a lower-tiered DStv bouquet.
MultiChoice was asked when DStv Flex, with sport as a separate add-on package, could be introduced but didn't respond.
