MultiChoice is starting to weaken its DStv SuperSport offering to save money after disappointing results, which points to serious trouble for the pay-TV operator.
On Thursday, 30 March, DStv surprised subscribers when it announced it would stop broadcasting the Indian Premier League (IPL) as of this year’s edition.
SuperSport previously held broadcast rights to the IPL, as with all other big sporting events.
DStv Premium subscribers are willing to pay nearly R1,000 a month because of its exceptional SuperSport offering.
Whether it is rugby, soccer, cricket, tennis, boxing, golf, motorsport, or athletics – if there is a big sporting event, it is sure to be on SuperSport.
However, MultiChoice has now broken the trust of DStv Premium subscribers after it failed to secure broadcast rights for this year’s IPL tournament.
SuperSport said commercial discussions with the rights holder have been unsuccessful. Simply put, it was unwilling to pay what the IPL was asking.
MultiChoice’s trading statement two weeks ago explains why it has tightened its purse strings regarding sporting rights.
“The operating environment in South Africa has deteriorated beyond expectations over the past few months,” it said.
MultiChoice warned investors that sustained high levels of load-shedding significantly impacted the activity levels of the DStv customer base.
The company’s subscriber growth and customer mix were further impacted by the negative effect of a weak economy on consumer spending.
Although MultiChoice did not explicitly state it, it is expected there was a big decline in DStv Premium subscribers.
Losing high-end subscribers hurt the company’s top and bottom lines, and indications are that revenue growth in the South African business will be below expectations.
With fewer DStv Premium subscribers, there is less money to pay for big sporting events like the IPL.
It is a downward spiral, as many high-end DStv subscribers will dump the service if they cannot get all the sporting events they want to watch on SuperSport.
Netflix and Disney+ easily replace movies and TV series, and there are numerous sporting streaming services to serve fans’ needs.
It is already a challenge for MultiChoice to hold on to DStv Premium subscribers, and watering down the SuperSport offering can lead to a death spiral for the pay-TV service.
The charts below show that DStv subscriber growth in South Africa is plummeting and the average revenue per user (ARPU) is also declining.
It explains why MultiChoice’s share price plunged after its recent trading update, as it is unclear where the company’s growth will come from.
On 31 March 2023, shortly before the tournament started, SuperSport announced that it had secured rights to broadcast the Indian Premier League (IPL).
“Following updated conversations, DStv can confirm that all IPL matches will be broadcast on SuperSport starting today,” it said.
“All 74 matches of the tournament will be broadcast live, starting with the Gujurat Titans vs Chennai Super Kings (DStv channel 212) at 16:00 (CAT).”