DStv banks on local shows, sports to woo Africa's middleclass

The giant pay TV provider says it will beat American streaming services Netflix thanks to its fresh content and live sports events, both of which are important to its customers.

Even though it is under fire from consumers and the market, giant pay TV provider DStv remains bullish about the future.

The company recently hiked its prices saying that it had done so because of the devaluation of the dollar, but consumers rejected the explanation, with many saying they could not afford the new prices.

Besides, competition from American on-demand Internet streaming companies like Netflix could prove to be a headache but you can’t tell, listening to Multichoice CEO Tim Jacobs.

TOUGH COMPETITION

“Our parent company Naspers recently launched Showmax in South Africa, and the intent there is they (Netflix) also get to compete with us,” he said, "how do we compete? The one benefit that pay TV has is the freshness of our content. The big differentiator, the one thing you will never see on Netflix is all of the local content we produce and live sports events, which is big for many subscribers.”

According to an interview with Fin24, Naspers CEO Bob van Dijk is focusing on how to beat Netflix to a potential audience of more than one billion across Africa.

“It’s a priority for the group,” said the project manager during the interview at Naspers’ headquarters in Cape Town recently. “We’ve never limited our ambition to South Africa,” he added.

According to the website, Van Dijk is plotting the expansion of ShowMax across the least-connected populated continent as rival Netflix plans to expand and be present in 200 countries by the end of next year.

According to Fin24, Naspers plans to spend about Sh6.8 billion ($65m) on ShowMax this year, with the company not expecting ShowMax to make any profits until at least 2017, according to van Dijk, who declined to give subscriber numbers or forecasts.

With broadband penetration growing by the day in many parts of Africa, the TV war is going online but DStv is not worried and according to Jacobs, it is bracing for the competition.

PRODUCT PRICING

As for the pricing, Jacobs says the company deals in dollars outside South Africa, which could explain why South Africa, with 5.4 million subscribers, is much cheaper than Kenya.

“Scale. That is something you will hear a lot; the South African market is significantly bigger than Kenya’s.

At a recent MultiChoice showcase in Mauritius, Jacobs reiterated the company’s ambition to be the best content provider across all platforms in the continent.

“We believe television is an extremely powerful tool that can educate, entertain and inform. The evolution of this medium has become fast and furious and as a business, we are constantly evolving to stay ahead. Our aim to is to make only the best content services available to subscribers on any platform, on any device and anywhere – and we have made huge steps towards making this happen,” said Jacobs.

Asked why the company can’t offer people only what they want, Jacobs said that would be more expensive to the subscriber.

EXPENSIVE CONTENT

“In the total cost we have on the DStv platform, the sports cost is fixed, doesn’t matter how many subscribers you have watching. Sports is also the most expensive type of content that we offer. We bundle sports in, say, Premium package, and this has been proven worldwide as the most cost effective way to deliver the content to the subscriber. If you remove it, it will be more expensive.”

In Mauritius, the company had executives from some of their major international suppliers like Time Warner, Viacom, BBC, TLC among others, who all expressed confidence in the African market and DStv.

The much-talked-about African middleclass is a new market for these international brands that have hit saturation levels in the US and European markets.

“Our passion for Africa is in everything we do – as a home-grown company, our roots are firmly in African soil and our growth over the last 20 years has been a result of massive investments we have made in people, content and technology.”