MultiChoice has halted the decline of its top-tier DStv Premium subscriber base, with the number of customers on this package increasing marginally year on year in the six months to September 30.
This is a significant improvement over the 3% drop in Premium subscribers at this point last year.
This base has been under significant strain for years, as it has faced a pool of upper-income customers who were abandoning pay-TV subscriptions in favour of on-demand services like Netflix, downgrading their packages, or emigrating.
MultiChoice says the Premium package is “stable after historic declines” despite not disclosing the number of subscribers.
However, the overall Premium segment, which includes Compact Plus, saw a 3% decrease in subscribers to 1.3 million. What’s more, the rate of decline is slowing.
The sharp drop in the number of Compact Plus subscribers will be a source of concern for MultiChoice. This is a 10% decrease from the previous year.
According to the company, this is due to the fact that this package was introduced as a way of upselling to mid-market Compact customers who are currently facing financial difficulties as a result of fuel and food price increases. These price increases disproportionately affect low- and middle-income customers.
The total Compact base (including commercial customers such as hotels, bars, and taverns) fell by 4% to 2.7 million. This base is down more than 5% from the peak of 2.9 million between March and September 2020.
MultiChoice saw the issues looming in the mid-market base last year and made several targeted changes to its key entertainment series and sport (basically, scheduling of DStv Premiership matches) on Compact channels.
Although it experienced significant subscriber losses across the upper and mid-market bases between April and June (Q1), it was able to reverse these and both of those segments grew between July and September, aided by sport.
So far this year, the only subscriber growth in South Africa has come from mass-market packages such as Family, Access, and EasyView, a trend that has been in place for several years. These packages have monthly prices ranging from R29 to R309.
Streaming
Streaming has aided the local economy, as the number of customers accessing DStv via a stream has more than doubled in the last year.
It reduced the prices of its streaming-only packages in September. Premium, for example, costs R699 per month on this basis, compared to R839 with a dish and decoder.
It claims that it was able to lower these prices because serving these customers costs the group less. There is no need for set-top box subsidies, marketing costs and customer service requirements are generally lower, and content distribution costs are lower than with satellite.
The number of Showmax subscribers has increased by 50%, with the Showmax Pro base (which offers live sports, including football) increasing by 111%.
Overall, subscribers in its home market increased by 3% year on year to 9.1 million. It increased its subscriber base in the rest of Africa by 6% year on year to 13 million. Nigeria, which accounts for nearly half of this base, drove the growth, with subscribers increasing by 9%.
The Rest of Africa division, which accounts for 37% of group revenue, is still losing money.
However, MultiChoice claims that if it hadn’t written off R700 million in decoder subsidies for the FIFA World Cup, it would have been profitable in these six months.
This is due to increased stock levels of decoders held in anticipation of the football showpiece, and these subsidies are expensed upon delivery. It anticipates that this investment will result in increased subscriber growth and will help to mitigate “the growing risk of supply chain disruptions from global silicon chip shortages.”
The figures
With the help of a weaker rand, revenue increased by 7% to R28.6 billion. The core headline earnings increased by 2% to R2 billion.
BetKings, which it acquired 49% of last year, increased revenue by 62% to $93 million. It reported a loss of $16 million after taxes.
MultiChoice was able to repatriate $122 million in cash from Nigeria during this six-month period, which is roughly R2 billion, but it claims that because the currency had to be exchanged at parallel rates, it had to book a R1 billion foreign exchange loss on this ‘extraction.’