DStv increases prices – risking losing more subscribers

MultiChoice seems undeterred by declining subscriber numbers and announced that it will increase the price of most DStv bouquets on 1 April 2024.

The company said the price of its DStv satellite pay-TV packages will increase by between 3.1% and 7.8%. DStv’s streaming-only packages will remain unchanged.

These price increases come amidst a concerning decline in DStv satellite subscribers in South Africa – especially on high-end packages.

MultiChoice’s results for the half year ended 30 September 2022 revealed that middle-class South Africans continue to dump DStv in preference of streaming services.

DStv’s premium segment – Premium and Compact Plus packages – declined 3% year-on-year from 1.4 million to 1.3 million subscribers.

DStv’s mid-market segment – Compact and Commercial packages – declined by 4% year-on-year from 2.8 million to 2.7 million subscribers.

MultiChoice explained that its premium and mid-market segments came under pressure due to a tough consumer environment.

An even bigger concern is that the average revenue per user (ARPU) in all of DStv’s segments is declining.

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 result of the lower ARPU was MultiChoice’s revenue in South Africa decreased 2% year-on-year – from R17.8 billion to R17.4 billion.

South African consumers are stretched financially and cannot afford more expensive DStv services.

However, MultiChoice is in a pickle. It faces declining revenue in South Africa, and the expedient way to address this decline is through higher prices.

Unfortunately, the result is that MultiChoice’s downward spiral will likely continue, with more high-end subscribers downgrading or cutting the cord completely.

Big focus on streaming

MultiChoice’s decision to increase the price of its DStv satellite packages but keep DStv streaming-only package prices unchanged shows its growth strategy.

Apart from trying to bolster its DStv streaming services, MultiChoice is pinning its future on its newly launched Showmax offering.

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 against the likes of 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 pump $177 million (R3.3 billion) into its new Showmax offering during its current financial year.

This shows how serious MultiChoice is about competing in the streaming market and taking on Netflix in Africa.

A large chunk of MultiChoice’s focus and resources will go into Showmax, and its satellite service will likely play second fiddle.

However, DStv is still MultiChoice’s main revenue stream, and Showmax must achieve incredible growth to match it.

This illustrates how risky MultiChoice’s decision to bet on Showmax is, which has yet to prove that it can be profitable, in preference to its established DStv service.