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Bouquets on Choice

Onome Amawhe
Subscribers are important to Multichoice, the pay TV satellite provider that controls around 50 percent market share across Africa. Key to Multichoice’s large market is (DSTV), the “world-class television experience that provides “only the best in entertainment”. Joseph Hundah, Managing Director, Multichoice Nigeria thinks the DStv brand has become synonymous with innovation and quality and following the company’s recent launch of the DSTV Access, the newest addtion to the company’s bouquet offering which comes with 27 channels cutting across general entertainment, movies, news, children’s programming, music, religion and sports; DSTV Access, like the premium, compact and family bouquet before it proves to be real value money.

Joseph Hundah, Managing Director, Multichoice Nigeria

In recent times, there has been an increase in the number of  pay T.V dealers  signing up as Multichoice/DSTV franchisees: “Most of these dealers”, Hundah says, “ are from the SME segment who are willing to deal exclusively on the DSTV brand. This is a humbling development and it shows just how credible we are as a business and custodian of the DSTV brand. It is also worth mentioning that our subscriber number is steadily on the increase across all the bouquets we offer and it shows that Nigerians have really come to identify with the DSTV brand and in the process they also now see us as a company that delivers”.

Multichoice, at the current time, have more than 400,000 (Four hundred thousand) active paying subscribers on its platform. It hopes that potential for subscriber growth in the Nigerian market will be on the increase in the next two years:

“For me, because our product is no longer the elitist product it was considered in the past, I would like to see the DSTV brand into the homes of more middle and low income earners than we have at present. I would also like to see rapid growth in the number of new subscribers from the Northern part of the country. My lofty future plan is to see DSTV in at least 20% (twenty percent) of all TV viewing households and we are already laying the foundation for that with our robust expansion plans and ever increasing number of distribution and service delivery networks”.

An important  factor for the actualization our growth plan is in government delivering on its promise of 6,000 megawatts which will lead to more steady power supply and by extension, more disposable income with which potential subscribers can pay for pay TV services.

The Multichoice legend began in South Africa in 1986, when M-NET was launched as Africa’s first pay- television. To provide subscriber management services, Multichoice was incorporated to M-NET and it  played an important role in the early success of the pay television. In 1993, Multichoice disengaged from M-NET as a customer service division and established a joint partnership with Naspers, a multinational media company with principal operations in electronic and print media.

In 1995, Multichoice announced plans to launch a new digital satellite television service in South Africa. In October of 1996, DSTV was officially activated to subscribers.  The MultiChoice Africa partnership with Naspers now provides multi-channel pay television and subscriber management services in 48 countries in Sub-Sahara Africa and the adjacent Indian Ocean islands. Naspers has ownership interests through MultiChoice Africa in joint ventures operating in Kenya, Ghana, Uganda, Nigeria, Tanzania, Zambia, Namibia and Botswana. In other Sub-Saharan African countries, MultiChoice Africa operates through agents or franchisees with the DStv service featuring over 60 video channels (including numerous customized M-Net channels:

“M-Net is a content provider while DStv is the brand and our inroad into the Nigerian pay TV market. And clearly, we have assisted M-NET in providing more local content on the DStv platform and has since been able to provide programs like The Edge of Paradise, Doctors Quarters, Tinsel, Deal or No Deal Nigeria, Big Brother Nigeria, Let’s Dance, Naija Sings and a host of others. Because of the influence and  success we have recorded with the entrant of the DStv brand, these local contents has made us more acceptable to the Nigerian subscribers. And I must say that our impact on M-Net has been very positive and so has been their impact on our business as well”.

There’s no doubt that M-NET is a major competitor to Multichoice in the way  it constantly puts the company on its toe and then making it raise the bar in its service delivery. In terms of the rapidly emerging competitors; Hundah is quick to say that “they are welcome” since he believes that the Nigerian market will be able to sustain more than two or three major (DTH) Direct To Home and Cable TV operators:

“We will always welcome competition because we know that it is good for the development of the industry. Competition…healthy competition that is… will empower the subscribers, avail them of the advantages of competitive content, abundance of choice to choose from and a reduction in the entry barrier as we are already witnessing. Competition will also help industry players to collaborate in the fight to stem the tide of piracy and other major obstacles to sustenance of the Pay TV industry.

Advertisers stand to gain in a competitive industry so we welcome competition any day. The only myth I would like to debunk though is that competition reduces the subscription price to the consumer. Competition actually tends to result in significant increases in rights and content costs which squeezes margins and sometimes results in increased subscription fees. This is common across the world and is unlike other businesses”.

The key driver of the pay TV business is content. However, where many pay TV operators jostle for the same content, the resultant implication is a huge rise in the cost of such content. A good case in point is the price of acquiring rights to the English Premiership and the Champions leagues which has increased by over 400% in the last two years. The resultant increase in costs means margins are placed under pressure which in some cases can even lead to business failure as was the case with G-TV (a DTH operator in the rest of Africa outside of Nigeria) last year:

“Content makes up almost 70% of any Pay-TV  operations so,  if such increases are taken into account ultimately these costs have to be passed on to the consumer in order for the business to survive”, Hundah Says. “ In essence, the low cost option is in line with our philosophy that TV entertainment need not cost an arm and a leg .And this approach is what has been helping us hold the value of what we have: To provide unbeatable customer service that is second to none anywhere on the African continent and to make the enjoyment of home television viewing a pleasant experience!”.

In making home television viewing a pleasant experience, he  notes that pay TV will not count  if the content is not compelling and interesting to the subscribers: “Our business demands a lot of balancing of varied interests – content producer/owners, content aggregator, subscribers and of course the interest of stakeholders”. One of the biggest challenges of Multichoice is around infrastructure.

And directly relating to the business but not peculiar to it is also the challenge of power supply which makes the “enjoyment” of the Multichoice service difficult for its subscribers: “These impacts negatively on our business and leads to huge revenue lose because some subscribers do not renew their subscription on the basis that the intermittent power supply doesn’t allow them to enjoy our services”.

Another challenge is piracy with a lot of stealing of content and rebroadcasting going on: “That is a major disincentive to sustenance in our industry. Piracy rears its ugly head in different forms – from the big defaulters who re-broadcast our channels using cables without permission; to the ever-increasing pockets of small viewing Centers populating different cities in the country as well as illegal carriage of foreign DTH services such as Showtime”. The current penetration of DTH in Nigeria is hard to pin because of the absence of research and reliable data but off hand estimate shows that there are over a million subscribers. This is inclusive of the cable TV and DTH subscribers.

The Multichoice CEO thinks this is pretty low considering the Nigerian population. He also thinks this is attributable to the lax in the economy as the main driver for growth in the pay-TV market is spearheaded by increases in GDP per capita: “More than 70% of Nigerians live below the poverty line but there is also a very large unmeasured informal economy which makes it difficult to determine if this penetration is low or not”.

As Multichoice continues to find ways of increasing the penetration of pay-TV across Nigeria, it is also looking at various new technologies to enhance the traditional broadcasting model and believes that in a couple of years, Nigeria should boast of a total penetration of two percent of the total population of the African continent.

This should come to about 2.5 – 3 million subscribers by the year 2015. “This is a generous assessment”, Joseph Hundah sums up, “and this can be achieved with infrastructural development and increase in purchasing power of the average citizen”.


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