DStv owner’s plan to beat Netflix and win the streaming war

MultiChoice, with its newest Comcast deal, is relying on the same strategy it used to dominate the South African broadcast television market to conquer the African streaming market.

Naspers spin-off MultiChoice has operated in an almost monopolistic environment for years, with very few local competitors able to compete with its DStv offerings and reach.

However, MultiChoice is losing high-end DStv subscribers as they drop the satellite TV service in favour of more affordable streaming services like Netflix.

As more streaming options started to pop up, the market became crowded, setting off what many call the “streaming wars”.

MultiChoice’s first answer to this threat was Showmax, the company’s video-on-demand service. Showmax was launched in 2015 and has since shown significant growth.

Multichoice CEO Calvo Mawela told CNBCAfrica that Showmax has grown by 68% in the past financial year, a large part of which was enabled by the service’s local content offering.

The company’s next step was to aggregate all available options on one platform by partnering up with its competitors.

In 2020, MultiChoice signed deals with Netflix and Amazon to offer their streaming services through its new decoder. Disney+ has also been added to this arrangement.

This made DStv a “one-stop shop” where subscribers could pay one bill and access a variety of content from different platforms. Mawela has referred to this as the company’s “super aggregation strategy”.

The super aggregation strategy can be seen in MultiChoice’s latest deal – a joint venture with Comcast’s NBCUniversal and Sky.

The deal centres around Showmax, which NBCUniversal’s Peacock will now power.

As part of the deal, Showmax’s ownership will change. NBCUniversal will own 30%, and MultiChoice will own 70%.

Mawela described this partnership as “two good businesses coming together”.

Peacock provides its international, third-party content and leading streaming technology, while MultiChoice offers its local content and African customer base.

Accenture MD for communications, media and technology in Africa, Nitesh Singh, told Business Day that this deal would allow MultiChoice to create a unified platform. 

Singh also praised the structure of this deal.

“This is an exceptional deal and shows that MultiChoice is thinking outside the box. By changing the ownership structure, they will acquire content from partners rather than suppliers – I think at very beneficial rates.”

However, MultiChoice’s aggregation strategy does not stop there. The company also has its eye on internet service provision, which goes hand-in-hand with streaming services.

The company launched its DStv Internet service in 2021, which allows customers to bundle their internet access and DStv subscription under one provider.

In its latest results, MultiChoice stated that DStv Internet has also made new fibre bundles available through “wholesale partnerships”.

The success of this service is yet to be established, with MultiChoice only reporting that it has seen “positive uptake of the product with a strong increase into the fourth quarter (albeit off a low base)”.