Price Hike Forces Many South Africans To Dump DSTV
South Africans dump DStv as price pain sets in
MultiChoice is struggling to hold on to DStv subscribers as years of price increases made the service expensive and uncompetitive in the new streaming market.
MultiChoice’s results for the six months ended 30 September 2023 revealed a loss of R911 million, a big decline from the R55 million profit over the same period last year.
One reason for the poor results is that middle-class South Africans continue to ditch DStv in preference for streaming services.
Over the last year, DStv subscriptions in South Africa declined by 486,000 – from 9.115 million to 8.629 million.
What was striking was that the subscriber decrease happened across the board over the last six months.
Simply put, DStv subscribers in the premium, mid-market, and mass-market segments are all cutting the cord.
An even bigger concern is that the average revenue per user (ARPU) in all of DStv’s segments is declining.
That means MultiChoice is losing DStv subscribers and making less money per subscriber. This explains its dismal financial state.
MultiChoice seemed undeterred by declining subscriber numbers and again increased the price of most DStv bouquets on 1 April 2024.
The pricing of its DStv satellite pay-TV package increased by between 3.1% and 7.8%. DStv’s streaming-only packages remained unchanged.
MultiChoice may try to increase the money it makes from its subscribers through these price increases, but this strategy has been failing.
Despite price increases last year, mass-market ARPU declined by 3%, mid-market by 2%, and premium by 4%.
This means many DStv subscribers are dumping the more expensive packages or downgrading to cheaper options.
The reality is that South African consumers are stretched financially and cannot afford more expensive DStv services.
There is no easy way out for MultiChoice. It faces declining revenue in South Africa, and the expedient way to address this decline is through higher prices.
Unfortunately, this strategy will fuel MultiChoice’s downward spiral, with more high-end subscribers downgrading or cutting the cord completely.
MultiChoice is pinning its hopes on Showmax to save it from declining DStv subscribers and bolster its financial performance.
Showmax 2.0 – a revamped version of its streaming service – was launched on 12 February 2024, with prices ranging between R39 and R99 per month.
MultiChoice is betting on Showmax to compete with Netflix, Disney+, and Amazon Prime Video to become the leading streaming service in Africa.
Showmax 2.0 was created through a partnership between MultiChoice, Sky, and NBCUniversal’s Peacock. MultiChoice owns 70% of the new service, while NBCUniversal owns 30%.
MultiChoice and NBCUniversal announced they will invest $177 million (R3.3 billion) in the new Showmax offering during the current financial year.
This shows how serious MultiChoice is about competing in the streaming market and taking on Netflix in Africa.
