MultiChoice is under tremendous strain. Subscriber numbers are, for the first time, in structural decline.
In the year to March 2024, it saw drops in not only its Premium segment (DStv Premium and DStv Compact Plus, down 8 percent) but also in its mid-market (DStv Compact, down 9 percent) and mass market segments (down 2 percent).
The latter, which offers entry-level packages costing as little as R29 per month, has been growing relatively strongly for years and has helped the pay-TV operator offset declines at the top end.
This reversed in the last year as higher interest rates, a stagnant economy and an explosion in other viewing options (many of which are free) hit the business.
Overall, subscribers are down 5 percent in South Africa -- nearly half a million accounts.
It has also been distracted by anything but pay TV, given that it has known for years that the market would turn ex-growth.
It's taken a sizeable gamble on a betting business (years and years too late) in Nigeria.
It expanded this to South Africa and has moved into what it describes as 'adjacencies' such as streaming (Showmax), reselling internet packages, safety (Namola) and payments ... anything and everything but its core business.
Canal+ will no doubt simplify the business (read: get rid of the distractions) once the takeover by the French is completed.
The business churns cash, and with efficiencies to be extracted on content, sports rights, and satellite transponder leases, it should return to healthy profit margins sooner than many think.
Strange decisions
However, to prop up the business, its management has made strange decisions in recent years.
Showmax as a proposition was always strange. The French have already publicly questioned why MultiChoice decided to launch an entirely separate streaming product to compete against its existing DStv Stream.
First, it launched a stripped-down sports bundle on its streaming service Showmax, which has since become a Premier League package.
At R69 per month, this provides a very affordable entry point for consumers who cannot or will not stump up the R469 per month for a DStv Compact subscription.
To make this bundle even more appealing, it has since added live PSL games to it, including cup competitions Carling Knockout Cup, MTN 8 and Nedbank Cup.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
Now, any younger consumer who might've considered a Compact package (or even a slightly cheaper streaming-only one at R399 per month) will surely choose Showmax (which is no longer even wholly owned by MultiChoice).
It also cracked down on households that share their streaming credentials, but then caved and offered additional mobile streams for R99 per month for Premium and just R49 for Compact packages.
It surely knew that stopping account sharing wouldn't suddenly get thousands of customers to subscribe (re-subscribe) to DStv. Or did it?
These additional subscriptions have helped prop up revenue, especially in the Premium base, as total subscriber numbers decline.
These moves have been the first steps to disrupt its core business as it charts a future beyond linear pay TV.
Showmax continues to grow (16 percent increase in paying subscribers since its relaunch in February) but remains unprofitable.
Its biggest move yet will launch this month in partnership with Capitec Bank, which has 20 million clients.
The bank's CEO, Gerrie Nel, announced this month that it will launch DStv vouchers that will enable customers to access specific content. -- Moneyweb.
