MultiChoice going for 50 million

MultiChoice’s goal to achieve 50 million subscribers across all its products by 2028 has remained the same despite the company’s declining subscriber count.

MultiChoice recently released its results for the 2024 financial year, which revealed disappointing results for the company.

The company’s financial statements for the year through March 2024 showed a R4.1 billion loss and that MultiChoice has become technically insolvent.

Foreign exchange headwinds and a lower subscriber base resulted in a 5% net decline in group revenues to R56 billion.

Weaker subscriber trends and foreign exchange pressures affected group trading profit, down 21% to R7.9 billion.

MultiChoice’s loss for the year increased from R2.9 billion to R4.1 billion – a 42% decline. It is its worst performance on record.

Things went slightly better for the recently relaunched Showmax, which recorded a 16% growth in the paying subscriber base from the migrated base.

Despite these poor results, MultiChoice CFO Tim Jacobs said the goalposts have not moved, and the company is still committed to achieving the goals it set for itself within the promised timeframe.

MultiChoice has two highly ambitious goals it wants to achieve within the next five years –

  • The first is to generate $1 billion (R18.5 billion) within five years with its Showmax 2.0 service.
  • The second is to have 50 million users across both DStv and Showmax in 2028.

Jacobs has previously admitted that these are highly ambitious goals, but the company is determined to achieve them.

Part of what makes these goals so difficult is that MultiChoice is banking on Africa for this growth – but the numbers simply do not add up.

To generate $1 billion in revenue, MultiChoice will need around 16 million active subscribers who pay an average of R99 per month.

Digital TV Research predicts that the total number of video streaming subscribers in Africa will only be 15.6 million users by 2028.

In addition, rather than growing its subscriber base, MultiChoice is losing DStv subscribers.

In the 2024 financial year, the company suffered a 9% decline in active subscribers. This is mainly due to a 13% decline in the Rest of Africa business and a 5% decline in South Africa.

However, the company attributed this loss to a difficult trading environment, as many of its operating markets are experiencing high inflation, interest rates, and living costs.

Many of its markets are even seeing hyperinflation and suffering foreign exchange challenges.

While these conditions are predicted to improve, they are not guaranteed to stop weighing on the company’s performance within the next five years.

However, Jacobs said the company is focused and has already crossed the first hurdle with its relaunch of Showmax.

Earlier this year, the company unveiled ‘Showmax 2.0’, a new and improved version of its streaming platform.

MultiChoice is banking on Showmax to lead subscriber growth within the next few years and make the company the most dominant streaming service in Africa – beating out even international giants like Netflix and Amazon Prime.

Africa is a relatively underserviced continent compared to the international market, and many expect this to change in the near future. 

The continent has immense growth potential, and many new and established players are vying for a share of this growth.

Between large global streaming players like Netflix, Disney+, and Amazon Prime, there is much competition to capture the biggest share of this growth.

However, MultiChoice believes Showmax will be able to compete with these players through its understanding of and experience with the continent and its unique local content offering.

Jacobs told Daily Investor that the migration to the new platform went well. The company was able to migrate 100% of its eligible Showmax customer base to the new platform. 

He said the new service resonates well in the marketplace and has a strong content lineup.

Now, the company is focused on expanding the service’s key enablers, like broadening its payment platform.

In its latest financial results, MultiChoice said Showmax subscribers grew by 16% over the last year. Showmax revenue reached R1.03 billion, a 22.4% increase from 2023. 

While this growth is impressive, Showmax will have to grow over 100% per year for the next four years to achieve its R18.5 billion revenue target.

Although MultiChoice did not release the latest Showmax subscriber numbers, it is estimated to be between 700,000 and 1 million.

Assuming that MultiChoice’s 50 million subscriber goal is split between DStv and Showmax, the company will need to capture 25 million subscribers on the Showmax platform by 2028.

Based on this forecast, Showmax would need to grow its subscriber base by around 100% a year until 2028.

Therefore, the 22.4% revenue growth and 16% subscriber growth over the last year are far short of expectations.

The charts below show the platform’s historical data in blue and the required growth in red to meet its targets.