Multichoice’s record loss of subscribers: just as much to gain for Showmax relaunch?

On 10 January 2024, Multichoice announced an agreement with rights holder New World TV, enabling SuperSport to broadcast all AFCON matches. Despite the initial failure in securing the rights, a distribution agreement was finally reached with the Togolese broadcaster. This achievement for the South African media giant comes against a difficult backdrop, with its satellite service DStv recording a decline in subscribers and profits at Q3 2023 in South Africa, marking the first downturn in the company’s most dynamic market. Notably, subscriber numbers fell by 7% between Q1 and Q3 2023. This reversal prompts questions about the sustained success of Multichoice since its inception. Until 2018, Pay TV revenues in South Africa surpassed the combined revenues of all other countries in Sub-Saharan Africa. Even though the balance of power has shifted since then, South Africa’s Pay TV revenues still account for approximately 70% of the combined revenues of other African countries. And yet, since its launch, Multichoice in South Africa has consistently held over 85% of market share in terms of both subscribers and revenue. How to explain this shift in trend in the Group's most dynamic market when at the same time, the company continues its expansion by revamping its streaming platform Showmax, with a much-anticipated new version scheduled for release in February 2024? DStv packages: a wide range of satellite channels at a fair price compared to competition DStv positions itself in the market by providing an extensive array of channels at competitive pricing. For instance, in South Africa as of November 2023, DStv presented packages ranging from 31 channels to 150 with prices between $1.56 and $47.35. In contrast, ZAP’s Premium package, priced at $51.17, offers 105 channels, representing a difference of 45. And yet, despite the variance in channel count, both packages maintain similar proportions of content genres, including sports channels (12-15%), movies and fiction channels (19-20%), and international channels (10-12%) among others. Hence, Multichoice’s packages hold heightened appeal for users due to their offering of the most competitive pricing for a relatively equivalent channel lineup. DStv South Africa not only features some of the most widely distributed channels in the region, including Nat Geo Wild, National Geographic or BBC News, but also provides exclusive channels not available through other Pay-TV services. These encompass for instance its 17 SuperSport channels specializing in sports such as football, cricket and tennis. Still, the South African entity encounters challenges in the country that was historically considered to be the most dynamic: South Africa. Multichoice’s growth disparities between South Africa and the Rest of Africa Indeed, for the first time, Multichoice has reported a 5% decline in its active subscriber base (90 days) in South Africa between Q3 2022 and...