Netflix is no David to the MultiChoice Goliath

Reed Hastings of Netflix is a co-moderator on the Aspen Global Leadership Network of which I am a fellow and moderator. When I first met him years ago, Netflix at that time was already pretty brilliant and I was gobsmacked when he told us the story. He had spent a fortune in fines on late video shop returns (who hasn’t?) and he began to wonder why. So he and his business partners figured that we don’t always finish watching movies in a single sitting, that we may change our minds about when we want to watch them and that we may even take more than a day to finish. The convenience economy was in its infancy and Hastings clicked — perhaps he even helped define the world in which elites can use technology to get things to deliver to them. So, Netflix started mailing movies on DVDs (then a revolutionary format) and let lenders have a few days to watch them before returning them to then conveniently placed depots.

Roll on a decade or two and now Netflix has taken that knowledge of how human beings tick, and how we like our movies, to turn it into a leader in internet TV streaming. We like. Narcos, one of the first blockbuster series out of Netflix, is right up there with magic on air.

Netflix gets better and better. And in SA, Netflix is signing us up left, right and centre. All I need is a little time and a tech-savvy millennial and that Apple TV I bought is going to deliver Netflix into my lounge. At a cost of R130 a month, it’s less than half my average Uber Eats delivery.

In other words, it’s a subscription I am happy to pay. If I wasn’t a news junkie, I would probably be a convert from DStv.

Over at DStv, another brilliant businessperson is sweating. Like

Hastings, Koos Bekker is a disruptor. His concept of paid digital TV in the form of M-Net upended the SABC to such an extent that it has never recovered. Now Bekker’s baby is being disrupted and MultiChoice CEO

(DStv’s parent company) Calvo Mawela is calling for Netflix to be regulated. This has provoked the scorn of South Africans, who are treating Netflix as a cool young upstart made in Soweto and therefore a subscription we must take out to stick it to big white MultiChoice. It’s not a sharp argument. For one, Hastings is not a laaitie from Soweto taking on the TV monopoly. He’s richer than Bekker and riding a wave that could take out MultiChoice. DStv, and specifically SuperSport, is losing out to new services for sports rights, its sine qua non until now. Soon you may be able to watch all your favourite sports on the net.

When you go to the MultiChoice campus in Randburg, it bustles with people who work there. Whenever I have a problem with my decoder or want an upgrade, agents whose livelihoods depend on DStv help me quickly. It is a big employer in its own right and in the downstream companies which depend on it. Randburg is an unlikely Hollywood, but it is filled with TV production companies adjacent to the MultiChoice hub. These companies pay significant tax. Netflix has a presence here, which is great for competition and for the local production industry, but it creates a tiny number of jobs in comparison. And, like Google, Facebook, Uber and the other tech giants opening up offices here and in the rest of Africa, they may pay some tax here, but profits are largely repatriated.

These companies will argue that revenues from SA are so small to be blips on the big money boards, but these are frontier or emerging markets growing really quickly as the cost of data comes down. I’m not big on regulation, but disruption in TV, and related sectors, does require the attention of the Independent Communications Authority of SA, which still sounds like it operates in an era before the internet had come along to make our lives easier but our business landscape more complex and risky.

If I wasn’t a news junkie, I would probably be a convert from DStv