MultiChoice, the media giant behind DStv, is facing a significant crisis. Its latest annual report, covering the year ending 31 March 2024, reveals a dramatic decline in South African subscribers, painting a bleak picture for the future of the once-dominant pay-TV provider.
The figures are stark: active DStv subscribers in South Africa have fallen from 8.0 million to 7.6 million, a worrying trend impacting all segments of their market. This decline, coupled with a R4.1 billion loss, has left the company technically insolvent.
The report details the drop across all DStv packages: Premium subscribers decreased by 8% year-on-year; mid-market packages saw a 9% decline; and even the mass-market segment experienced a 1% drop.
MultiChoice attributes this to a confluence of factors, citing "severe economic pressure, consumers’ financial distress, the high cost of living, and elevated interest rates," along with the impact of load-shedding, which they say creates an environment where "customers are reluctant to reconnect," resulting in a drop in viewership and subscriber numbers. However, these explanations fail to fully address the fundamental shift in consumer behaviour.
The truth is, South Africans are increasingly turning their backs on DStv in favour of more affordable and accessible alternatives. The rise of uncapped broadband internet access and the proliferation of online streaming services have fundamentally altered the entertainment landscape. The decline of DStv Premium, the most expensive package, began eight years ago with the expansion of uncapped fibre internet and the arrival of Netflix.
As affordable fibre and wireless options like Rain expanded into middle- and lower-income areas, DStv's subscriber base in these segments also began to shrink. Companies like Vumatel and Herotel are further accelerating this trend by rolling out affordable fibre services to lower-income communities. The inevitable consequence is a continued erosion of DStv's subscriber base as more households gain access to uncapped internet.
The rise of online streaming services further compounds MultiChoice's problems. Netflix and Amazon Prime are no longer the only players; a plethora of streaming platforms, many offering free content, cater to diverse tastes, from sports and movies to documentaries and TV series. This abundance of choice, combined with the affordability of online streaming, makes DStv's relatively expensive packages less appealing.
MultiChoice attempted to counter this shift by launching bundled broadband access and a bundled streaming package. However, these initiatives failed to gain the anticipated traction, leading to the discontinuation of DStv Internet fibre products, including bundled offers combining Premium or Compact subscriptions. MultiChoice stated they will "continue to review the DStv Internet offerings as demands shift."
Adding insult to injury, Telkom is poised to launch a significant competitor. They plan to create a platform aggregating Netflix, Amazon Prime, Disney+, and other streaming services into a single, affordable bundle, providing the necessary data for streaming. Telkom Consumer CEO Lunga Siyo confirmed this strategy, highlighting the shift from satellite to internet streaming and the opportunity it presents for companies like Telkom to challenge MultiChoice's dominance.
MultiChoice has previously acknowledged the existential threat posed by over-the-top (OTT) streaming providers like Netflix and YouTube. This warning is now a reality. Unless MultiChoice can successfully transform itself into a major streaming player through Showmax and DStv Stream, it faces an uphill battle for survival in the rapidly evolving South African entertainment market.
The company's financial woes and declining subscriber base clearly indicate a need for a radical and swift strategic overhaul to remain competitive. The future of DStv, once a household name, hangs precariously in the balance.
