DStv is facing threats from international streaming services, local competitors like Openview and PremiumFree, and a Competition Commission investigation.
MultiChoice’s response to these threats will shape what DStv’s products look like in future and how subscribers will consume content on the platform.
Launched in 1995, Digital Satellite Television (DStv) has been the dominant pay-TV service in South Africa for three decades. It faced some competition from TopTV (now called StarSat) which was launched in 2010, but it hardly made a dent in MultiChoice’s monopoly.
Now there are new competitors which MultiChoice is rightly worried about. These are not licensed pay-TV broadcasters, but rather international streaming services.
The arrival of fast and affordable broadband paved the way for South Africans to cut the cord and sign up to Netflix, Amazon Prime Video, and other streaming video platforms. At a fraction of the price of DStv Premium and with a bucketload of on-demand content at up to 4K, these services offer excellent value for money.
Many people are more interested in movies and TV series than sport, and this is where streaming services shine. Netflix, Amazon Prime Video, Apple TV+, YouTube Premium and other services have enjoyed strong adoption in South Africa.
Other heavyweights like Disney+, Hulu, and HBO Max are also expected to launch in the country in future.
Sports lovers can also subscribe to a growing number of sports streaming services, like F1TV Pro, UFC Fight Pass, Tennis TV, and WWE Network.
Local streaming services, like TelkomONE and Vodacom Video Play, provide further competition to MultiChoice’s ShowMax and DStv Now offerings.Unveiled in November 2020, TelkomONE offers a range of free content including SABC and news channels, paid-for movies, and TV shows that primarily consist of local reality programmes.
Telkom has not released subscriber numbers yet, but said it was pleased with consistent growth in registrations and content engagement across the platform. Vodacom Video Play is another big local player. Launched in 2015, it is targeting mobile users with movies, series, kids shows and music videos. It grew to over a million subscribers by 2019.
So significant is the threat from over-the-top (OTT) providers like Netflix, YouTube, and Disney+, that MultiChoice described it as an existential competitive threat to DStv. MultiChoice told the Independent Communications Authority of South Africa (ICASA) that OTT operators are their biggest competitors and a real threat.
“Currently competition is fierce and will continue to grow rapidly and in a disruptive way,” MultiChoice said. “We consider providers like Netflix, YouTube, Disney+, HBO Now & Peacock to be an existential competitive threat.” Calvo Mawela, MultiChoice Group CEO.
DStv’s answer to streaming services encroaching on its territory is to offer Netflix, Amazon Prime, and YouTube through its DStv Explora decoders.
MultiChoice CEO Calvo Mawela said it makes sense for DStv to become a one-stop-shop where you pay one bill and get access to all streaming content, including Netflix, Amazon, Hulu, and YouTube. There is however a snag – a Competition Commission investigation.
Competition Commission spokesperson, Siyabulela Makunga said they are investigating MultiChoice’s deal with Netflix and Amazon Prime Video. The investigation is focussed on the integration of popular international streaming services into its DStv Explora decoder, which may lessen competition.
If the outcome of this investigation is not favourable for MultiChoice, it can stop its Netflix and Amazon integration plans in its tracks. It is not only local and international streaming services which are looking to take market share from DStv. South Africa’s free-to-air satellite TV service platform, Openview is aggressively targeting the less affluent end of the market.
Openview has increased its investment in content from R308.7 million to R366.9 million per year to strengthen its offering. The platform is currently offering over 18 TV and radio channels and has signed an agreement in March to add a new SABC Sport channel to the platform.
The strategy is working. Openview set-top box activations continue to grow at an average of 35,000 per month. eMedia Holdings’ latest financial results revealed that Openserve now has 2,361,443 users, up from 1,992,844 a year ago. It is not only Openview which is going after the South African satellite TV market.
AfricaXP expanded its free-to-air satellite TV service, PremiumFree, to millions of satellite dishes in South Africa on 1 May 2021. PremiumFree is already offering free-to-air satellite TV services in many African countries through two Eutelsat satellites.
AfricaXP is now further extending PremiumFree’s reach through a partnership with Intelsat via its IS-20 satellite; the same satellite DStv uses which covers most of Sub-Saharan Africa. AfricaXP CEO Craig Kelly said the capacity on Intelsat’s IS-20 satellite gives them additional coverage and direct access to over 40 million homes across this region with dishes aligned to it.
Many households in Southern Africa have IS-20 aligned dishes connected to “closed” decoders that lock out other channels. These viewers could now buy any low-cost free to air decoder and connect it to their LNB cable coming from the dish to receive the PremiumFree channels.
The current PremiumFree bouquet offers 20 English channels with a strong focus on African content. Openview and PremiumFree compete directly competing against DStv EasyView which is priced at R29 per month. It is not clear how MultiChoice will react to the competitive and regulatory threats, but it is likely to include improved streaming services.
The company is already offering its own streaming service, ShowMax, which was launched in August 2015. Last year MultiChoice unveiled its new Showmax Pro offering which includes a selection of live sports. It followed up its enhanced ShowMax Pro service with the launch of a new standalone DStv streaming service in December.
The standalone DStv streaming service allows existing and new subscribers to access content on mobile phones, tablets, gaming consoles, or smart TVs without the need for a dish or decoder. MultiChoice is also busy developing a bundle which will combine DStv subscriptions with uncapped Internet service packages. These interventions will help to make MultiChoice competitive, but whether it will be enough to maintain its dominance remains to be seen.