Icasa wants ev­i­dence stream­ing crip­ples Mul­ti­Choice rev­enue

Weekend Argus (Saturday Edition) - - NEWS - SAMEER NAIK

THE IN­DE­PEN­DENT Com­mu­ni­ca­tions Author­ity of SA (Icasa) has yet to be con­vinced that stream­ing gi­ants such as Net­flix and Ama­zon are the rea­son be­hind Mul­ti­Choice’s mas­sive loss in busi­ness.

Mul­ti­Choice, which op­er­ates DStv, claims it lost over 100 000 DStv Pre­mium sub­scribers in its last fi­nan­cial year from the “un­reg­u­lated” com­pe­ti­tion it faces from “over-the-top” (OTT) In­ter­net stream­ing ser­vices like Net­flix.

This was re­vealed by Mul­ti­Choice SA’s chief ex­ec­u­tive Calvo Mawela yes­ter­day when he pre­sented his ar­gu­ment to Icasa’s panel on the fi­nal day of the com­mu­ni­ca­tions reg­ula- tor’s public hear­ings, held from Mon­day.

The hear­ings were an en­quiry into sub­scrip­tion TV broad­cast­ing ser­vices.

Icasa is look­ing into ad­dress­ing Mul­ti­Choice’s “mar­ket dom­i­nance” by fur­ther reg­u­lat­ing it. How­ever, Mul­ti­Choice has ar­gued that if Icasa pro­ceeds with more reg­u­la­tions, it will kill DStv’s busi­ness and hand the South African mar­ket to the on­line stream­ing gi­ants.

Ac­cord­ing to Mul­ti­Choice, Net­flix and other in­ter­na­tional stream­ing com­pa­nies “do not pay tax” in South Africa, and also don’t con­trib­ute levies to or­gan­i­sa­tions such as the Me­dia De­vel­op­ment and Di­ver­sity Agency or Uni­ver­sal Ser­vice and Ac­cess Agency of South Africa, nor do they pay broad­cast­ing li­cence fees.

Mul­ti­Choice ar­gued to Icasa’s coun­cil that it must not go over­board with reg­u­la­tions, and that what­ever it im­ple­ments should ap­ply to the whole pay TV sec­tor – in­clud­ing ser­vices like Net­flix.

“We un­der­stand that OTTs have come in to the mar­ket and they have had se­ri­ous growth and their rev­enue fig­ures have sub­stan­ti­ated that,” said Nomonde Gongx­eka-Seopa, an Icasa panel mem­ber.

“What we are miss­ing though is how this had an im­pact on the pay TV mar­ket, which you haven’t pro­vided us with.

“You have pro­vided us with graphs on how OTTs have af­fected pay TV sta­tions in coun­tries like the UK and the US, but we need re­search within the South African mar­ket to con­vince us that these OTTs are com­pet­ing with pay TV.”

Icasa has given Mul­ti­Choice un­til May 31 to pro­vide it with “em­pir­i­cal ev­i­dence” that there is a di­rect link be­tween the pres­ence of OTTs and its drop in rev­enue and sub­scriber num­bers be­fore they make a de­ci­sion whether it will fur­ther reg­u­late pay TV sta­tions.

“We need to see that there is a di­rect link be­tween the pres­ence of OTT in and your rev­enue and your sub­scriber base in such a way they are re­ally sig­nif­i­cantly im­pact­ing on the com­pe­ti­tion dy­nam­ics specif­i­cally for the South African mar­ket.”

Mawela warned Icasa that heavy-handed reg­u­la­tions for pay TV could cost thou­sands of jobs.

“Net­flix will never em­ploy a lot of peo­ple around the world like we have. It em­ploys about 4 000 peo­ple for the whole group,” said Mawela.

Mul­ti­Choice has 8 000 em­ploy­ees in South Africa alone. He said most of its staff were black, and that most of the peo­ple it em­ploys are women.

At the end of its last fi­nan­cial year, Mul­ti­Choice’s staff com­ple­ment was 87% black, and 51% black women.

It is also a Level 1 B-BBEE con­trib­u­tor, pay­ing R10.4 bil­lion to black sup­pli­ers in the last fi­nan­cial year.

While there will be jobs for South Africans work­ing in the broad­cast­ing sec­tor at multi­na­tion­als like Net­flix and Ama­zon, those com­pa­nies won’t have the lo­cal fo­cus Mul­ti­Choice does.

Mul­ti­Choice SA chief op­er­at­ing of­fi­cer Mark Rayner be­lieved that OTTs would fun­da­men­tally dis­rupt the pay-TV in­dus­try and that Icasa was not pay­ing enough at­ten­tion to these de­vel­op­ments.

“The in­ter­net will fun­da­men­tally change TV and the au­dio- vis­ual sec­tor for­ever,” Rayner said.

“We are see­ing a huge be­havioural shift in the way peo­ple con­sume con­tent.

“Au­dio-vis­ual ser­vices are in­creas­ingly be­ing watched on other de­vices, not TV sets.”

The “mas­sive dis­rup­tion” caused by OTT ser­vices in the pay-TV mar­ket “is sim­i­lar to how OTT ser­vices al­tered the news­pa­per and mu­sic in­dus­tries. It will hap­pen very fast,” Ranyer said.

“This is some­thing we worry about.

“This is what keeps the lights on at Mul­ti­Choice at night.

“This is chang­ing our world for­ever.”

He said Mul­ti­Choice was fac­ing sig­nif­i­cant new com­pe­ti­tion in the stream­ing space, not only from Net­flix, but also from Google’s YouTube, Face­book, Ap­ple, Ama­zon and others, and lo­cal ser­vices like Cell C’s Black and Liq­uid Tele­com’s Kwese Play. He said Net­flix would spend $8bn (R98.1bn) on con­tent this year.

“That is un­matched by any­one else in the world.”

Icasa said Mul­ti­Choice needed to be aware of other fac­tors that could have played a role in their loss of busi­ness.

“It’s pos­si­ble that the eco­nomic cli­mate in South Africa might have changed in that time and that is why you may have ex­pe­ri­enced a loss of sub­scribers,” said Botlenyana Mokhele, an Icasa panel mem­ber.

“For us to ap­ply our minds based on the facts that are pre­sented to sup­port your ar­gu­ment, we need you to pro­vide suf­fi­cient ev­i­dence,” Mokhele said.

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