Multichoice eyes greater streaming services revenue
Multichoice has agreed to add Netflix and Amazon Prime Video to its TV offering writes, Sandile Mchunu
MULTICHOICE is looking at new revenue streams to expand further following the declaration of a bumper debut dividend since it was spun off Naspers last year.
Multichoice said it was looking to maintain its profitability through the integration of streaming services onto its Dstv platform.
The group said negotiations with Netflix and Amazon were continuing.
In a surprise move on Friday, Multichoice removed the Netflix and Amazon Prime logos from its profile, signalling the seriousness of its negotiations with the new partners.
The group said it would integrate streaming services onto its Dstv platform.
Netflix is a competitor of Showmax, Multichoice’s own streaming service.
Chief executive Calvo Mawela said the group recently signed distribution agreements with two major international subscription video on demand (SVOD) providers to give its customers access to a wider variety of content.
“We have long been a content aggregator and this is proof of our aggregator model at work – providing simplicity, choice and convenience for our customers,” Mawela said. “As our industry evolves, we believe that we are well positioned to benefit from both worlds – a large, growing pay-tv market in Africa, as well as an emerging over-the-top (OTT) opportunity, where our own OTT services and aggregation capabilities can drive success.”
Multichoice is one of the fastestgrowing entertainment providers globally, delivering services to 19.5 million households in 50 African countries. The group was spun off Naspers last year.
This week the group paid a maiden gross dividend of 565 cents a share for the year to the end of March. It said revenue rose 3 percent to R51.4bn with subscriptions contributing a bumper R42.8bn on a 4 percent increase year on year.
The group said core headline earnings surged 38 percent to
R2.5bn. Free cash flow increased 59 percent to R5.2bn, driven mainly by an improvement in the trading results from its operations in the
Rest of Africa (ROA), a focus on cost containment and a reduction in working capital.
It added 900 000 90-day active subscribers, representing 5 percent growth year on year.
Mergence Investment Managers head of equities Peter Takaendesa said the addition of streaming platforms Netflix and Amazon
Prime Video could arrest the loss of premium subscribers in the medium term.
Takaendesa said the move was however unlikely to address some of the key issues that made its traditional subscribers dump it.
He said the rest of Africa operations had been making losses for a while and are likely to continue to do so at least for the next two years.
“Replicating the South African Dstv business model in the rest of Africa failed particularly on high end premium packages and the company has shifted its strategy to focus more on the mass market. However, the key issue remains a mismatch between local currency revenue and USD/EUR input costs for content and the delivery platform,” Takaendesa said.