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MultiChoice produces robust numbers, growing subscribers

‘We think that long-form video has still got a lot of legs and there’s a big addressable market, especially outside of South Africa’: CFO Tim Jacobs.

GARY BOOYSEN This is Gary Booysen standing in for Simon Brown this morning. Next up we’re speaking to MultiChoice CFO, Tim Jacobs. Tim, thank you very much for the early morning time. First, congratulations on a very solid set of results. I’m sure it wasn’t an easy year. It’s definitely not been easy for anyone, and people might say pay-TV is fantastic – people were stuck at home, so what else could they do? 

I think anyone who was running a business knows how difficult it was in terms of not just things like load shedding, but also just making sure staff was safe. So this is a robust set of numbers, growing your subscribers. First of all, congratulations. But just take us quickly through how you found operating in the last year.

TIM JACOBS: Thank you very much. Firstly, I think your analysis is 100% correct. It always looks easy, but it never is. We got a bit of a tailwind from residential customers. The lockdowns in the early part of the financial year in March 2020, coupled with kids staying at home, obviously gave us a bit of a boost. So we started off with a good base and we managed to keep those through the year. 

But at the same time, if you think about, for example, advertising revenue – when we lost sport for a good part of the year that created a number of problems. Firstly, we lost advertising revenue. Secondly, in our premium base, some of those premium customers who are very sensitive to preferences like rugby, we saw some churn and downgrading from the premium packs. And then, of course, all of our commercial customers – this is the hospitality sector – were quite severely impacted by the lockdown and people just reducing the amount of travel and holidaying that they did.

GARY BOOYSEN: Looking at the results, subscription still makes up the bulk of your revenue. But, as you say, there is advertising and you’ve got partnerships as well. I’m kind of interested to see how you guys are positioning yourselves going forward. You made that acquisition of BetKing as well. So there is the changing nature of your revenue model.

Given Netflix’s recent announcement that it’s opening to try to sell extra products around the site to generate revenue to bring them in line with maybe what Disney is doing with Disney Plus, where does this leave MultiChoice? How are you guys seeing the landscape shifting over the next couple of years?

TIM JACOBS: That’s a very interesting question. I think that the first and most obvious thing that everybody will be aware of is that consumer preferences are shifting towards more OTT (over the top) and internet services. But in Africa, there is a time lag. So while we see that shift being very aggressive in first-world markets, where connectivity is very strong and data prices are cheap, in Africa it almost plays out in slow motion. What we are expecting is that over a number of years this access to the internet with cheaper data prices and access to broadband will change. 

But in the meantime, the most efficient and the most cost-effective way to distribute, for example, long-form media is still via satellite and our GTT network. So that will still form a core part of our business.

But what we are doing, as you would have noticed, is that we are adding and we’re being an aggregator of key service providers and key content providers, the likes of Netflix, YouTube and Amazon Prime at the moment. I’m sure that that list will expand over the coming years. 

Then the second thing that we’re doing is we’re looking at developing our own OTT services. Showmax is our product. And of course, we launched last year Showmax Pro, which includes sports. We think over time that will gain some traction. 

And then the third element is we’re looking at adjacencies. In other words, how we first consider that we’ve got a customer base of almost 21 million customers which translates into about a hundred million users, and how we start to service those customers better with additional products. Many people won’t know that we’ve got about two million decoder-insurance customers, and we’ve now added funeral cover and some debt-waiver products. Those will be rolled out into the market. 

And then of course we are expanding our ecosystem through BetKing, as you’ve mentioned. 

GARY BOOYSEN: So really spreading out of the general content creation and all of that. There are two points I want to pick up on there. You mentioned the little bit of a lag in Africa. How much is Africa an opportunity for MultiChoice? Do you see South Africa as a springboard into Africa, and Africa as the next big kind of growth phase of the business? Or is it more the distribution of services, as in selling different products to existing subscribers in South Africa?

TIM JACOBS: It’s a combination of both. We still see a significant opportunity. Remember that Africa is a very young continent. We’ve got a young and growing population, unlike in many other places in the world. And we think that long-form video has still got a lot of legs and there’s a big addressable market, especially outside of South Africa, where the growth opportunity we still believe is big. 

And then of course there’s also the adjacency. The way we are thinking about this is it’s not about one or the other, it’s about being able to drive both growth opportunities at the same time.

GARY BOOYSEN: Okay. Then obviously the regulatory environment in South Africa also plays a big role – the idea that you have to have to deliver a certain amount of local content. Again, with other content providers like Netflix, we’ve seen almost the idea that government should be subsidising local content for them. You have hard barriers being put in place, saying this is how much you need to develop, this is how much you need to invest in South Africa. 

For MultiChoice – I think it was at the top of your chairman’s letter – you said a stable regulatory environment is important. What kind of challenges are you facing with regulations locally, or is it an opportunity?

TIM JACOBS: I think it’s a combination of factors. So the first thing is that we’ve worked in a regulatory environment for a long time and we have absolutely no problem with regulation per se. I think sometimes the challenge is how regulation is executed – for example, your comment about local content. We produce a significant amount of local content, but imposing content quotas on the total amount of content that you produce doesn’t seem logical, and it’s just going to impact consumers negatively. So it’s not about the regulation per stock exchange, it’s more about how it gets implemented. There we try to help and assist the regulators in understanding the dynamics of broadcasting so that we can come up with the right types of regulation. 

And of course, the other thing that is important to us is that it’s an even playing field. So if we’re going to be regulated then we believe that all people in the market should be regulated, including the OTT providers.

GARY BOOYSEN. One hundred percent. That sounds very fair. I’m going to have to leave it there. MultiChoice CFO Tim Jacobs, thanks for the time this morning.

Listen to Monday’s full MoneywebNOW podcast here.


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Big in subscribers means a big jump in income..and yet they dont want to spend money on new content rehashing the old on every channel.

Pathetic the number of repeats one is getting on DsTv – no reduction in monthly subscription fees

Almost impossible to view anything on DSTV with so much advertising.

I have timed it, 7 minutes viewing time followed by 5 minutes advertising repeatedly.

I want to close my DSTV subscription very soon.

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