Putting the Multichoice decline in context

Multichoice reported significant losses for the six months ended 30 September 2024, which it says is due to a combination of macroeconomic pressures, foreign exchange fluctuations, along with intensified competition from streaming services. The company's profit and subscriber numbers have suffered, primarily driven by steep challenges in key markets like Nigeria and Zambia. The company's adjusted core headline earnings per share are also expected to decline by 97% to 101%.

By Lindsey Schutters

14 Nov 2024

DSTV satellite dishes were once a mark of suburban wealth.

Accenture’s communications, media, and technology lead for Africa, Nitesh Singh, told Bizcommunity that broadcasters worldwide, including Multichoice, face increased competition from digital disruptors like Netflix and Amazon Prime.

“Unfortunately, I think they saw the competition a bit too late,” Singh said in an interview at Africa Tech Festival.

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“They were disrupted by companies with a digital core, leveraging AI, cloud, and data, while traditional broadcasters have heavy infrastructure, satellite dependency, and large capex demands.”

Multichoice is responding to these challenges by pursuing an inflationary pricing strategy – which has led to price hikes of 5.9% in SA and 17% in rest of Africa – targeting cost savings (R1.3bn in H1, R2.5bn FY target) and expanding into new business areas such as fintech and gaming (read: betting).

The company has also invested in its streaming platform, Showmax, to compete with global players.

Diversification play

“Media companies are looking at different lines of business, including financial services and betting,” Singh explained.

Nitesh Singh

"However, he cautioned that media companies need to accelerate their transformation efforts.

"They're trying, but they're going to have to overhaul faster," he said.

"If they don't move quicker, they have a serious risk that their businesses won't be around in five to ten years’ time."

Worrying numbers

Interim results show a 44% to 48% decline in trading profit compared to the same period last year.

In South Africa, mid-market consumer pressure contributed to a decline in subscribers, while inflation and fuel scarcity in Nigeria and electricity issues in Zambia further complicated growth efforts.

Multichoice’s subscriber base in Nigeria has also been undercut by alternative content options and piracy, particularly in the mass-market segment.

The path forward is to continue evolving, while balancing its investment in traditional infrastructure with new, nimble technology to stay competitive against digital-first companies.