DStv set to go the way of the dinosaurs
Along time ago dinosaurs ruled the earth and were under no threat from other species. Then an asteroid struck and dinosaurs were wiped out.
Business “dinosaur” DStv, I believe, is about to be cleared out and replaced by apex predators. I have been fascinated by how big “dinosaurs” such as Nokia, Mxit, Kodak, Blockbuster and others collapsed, and I am convinced DStv is the next in line.
It has become arrogant, and got away with it because its customers had no alternatives. Now that subscribers have options, with the advent of video-streaming services, management should listen to what people want, bearing in mind this is an increasingly ondemand world.
With the advent of smartphones Nokia was advised to move to the Android operating system. They refused, and one of their executives said: “Using Android is like peeing in your pants in winter to keep warm.” He considered it a shortterm solution that would kill future profits. He was wrong, and Nokia paid the price.
DStv subscribers are subjected to many programming repeats and mediocre content. In this type of business content is king, which is why Netflix is investing R100bn to generate its own content, including local productions. I don’t see how DStv can match the content quality and budget of Netflix.
Many incorrectly assume DStv is not innovating. It has been innovating, but not in a disruptive manner. Its innovation has aimed to retain existing subscribers and increase profits. Dominant incumbents such as DStv focus on existing premium customers and try to milk them as much as possible, avoiding low-margin subscribers. Harvard professor Clay Christensen, who coined the term “disruption” in the business context, defined disruptive innovation as creating products that are cheap and accessible to many.
DStv’s focus has been on innovations such as PVR (personal video recorder) and adding bells and whistles to its existing offering. Such innovations do not improve viewers’ satisfaction as the content is still poor.
Efforts are under way worldwide to blanket Earth with cheap internet. SpaceX is planning to send 4,000 internet satellites into space, domestic regulator the Independent Communications Authority of SA is looking into ways to force down high data prices, and new start-ups such as Michael Jordaan’s Rain promise to make access to broadband ubiquitous in time.
MultiChoice should abandon its plans for a new DStv streaming service as this is likely to be money down the drain. It will struggle to compete without a monopoly. Yet DStv still has access to a large proportion of middle-class homes in SA and should leverage that advantage to introduce a cheap fibre-tothe-home network while their decoders are still on. This would also help drive more traffic to Showmax and other Naspers platforms, such as Udemy. Trying to compete in the videostreaming space will kill DStv’s profit margins. History has shown that when an incumbent with legacy infrastructure and linear-thinking staff tries to compete with new players things do not end well.
Nokia wanted to compete with Android and iOS, spending more than R50bn on improving the Symbian and Meego operating systems. All that investment was flushed down the drain. DStv risks going the same route. It should focus on niche markets such as live sports and events streaming, where it can still dominate.
It should partner with Netflix on local content, and help create a “Jollywood” (Joburg Hollywood) through the creation of local content with potential international appeal.
NOW THAT SUBSCRIBERS HAVE OPTIONS, WITH THE ADVENT OF VIDEOSTREAMING SERVICES, MANAGEMENT SHOULD LISTEN TO WHAT PEOPLE WANT