June 7, 2020

Television: Time for Pay-per-View?

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BY Obasolape Tychus

Just before the House of Representatives wenton the break enforced by the fury of the novel Corona Virus Disease AKACOVID-19, I was looking in the direction of the National Assembly’s lowerchamber to see what it would make of its desire to get pay television operatorsin the country to adopt a pay-as-you-go (PAYG) billing system. I bet there werethousands of Nigerians waiting-expecting, actually-to see the House compel theabolition of the monthly contract billing model for the a la carte-likePAYSG.  Following the adoption of amotion by Hon. Unyime Idem from Akwa Ibom State, the House resolved tointerface with MultiChoice, the biggest of the pay television serviceoperators, and its competitors to bring about the envisaged PAYG model, asubscriber’s wet dream for as long as I can remember.

Tuesday provided Idem, Deputy Chairman, House Committee ofCommunication, the opportunity to reboot his pet project. The occasion was theinauguration of the House ad-hoc committee on non-Implementation of PAYG, whichhe unsurprisingly chairs. Speaking with journalists after the inauguration andgushing with no little self-importance, Idem said: ”As chairman of this ad- hoc committee, I want toassure Nigerians that their interest will be protected. When I moved the motionon the floor of the House, I stated that in a business of this nature, thecustomers should be given the right to choose what they want. We haveinteracted with Nigerians and what they want is pay-as-you-go, so that whenthey are out in their respective locations, their subscriptions can be thereand they will make use of it when they return.”

Idem addedthat his committee is ready to step on toes because its members were elected byconstituents “based on courage and boldness”.

While moving his motion in March, Idem notedthat National Broadcasting Commission (NBC) Act empowers the commission toregulate the ownership, activities or operations of radio and televisionstations as well as direct broadcast satellite service providers. He claimedthat there are over 10 pay television service providers in the country, withall of them refusing to abolish the monthly billing system. But most of thelawmaker’s barbs were directed at MultiChoice, which he said charges Nigerianssubscribers monthly unlike what is obtainable in other countries where itoperates.

“Nigeria constitutes 40 per cent of DStv’sglobal market share, yet over 40 per cent of the citizens do not use a greaterpart of their paid monthly tariff due to engagements that take them from onelocation to the other on a daily basis, hence they cannot access the servicesupon expiration, whether or not they used their previous subscriptions untilthey renew it for another month.

“The continuous exploitation by MultiChoice,owners of DStv, constitutes economic sabotage against Nigerians as most of thempay for services they do not consume while the company, judging from theiraverage monthly tariff of eight thousand naira, if multiplied by 11.9 millionsubscribers, makes about N100 billion monthly at the expense of itssubscribers,” Idem said in the manner of a demagogue.

I do not know where Idem got the numbers hewas playing with, but there is no way in the world they could be correct. As atNovember 2019 when MultiChoice Africa presented its maiden financial resultsafter listing on the Johannesburg Stock Exchange, the total number ofsubscribers across Africa was 15.1million. South Africa accounted for 7.4million, while the rest of Africa weighedin 7.7million, according to The website also reported that it wasthe first time the subscriber count from across Africa was exceeding the SouthAfrican count.

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Idem would follow this lie with another: Thatpay-as-you-watch is in operation in other MultiChoice markets. As with thefirst lie, the second was avoidable. A simple Google search would have shownthat MultiChoice operates the monthly billing system everywhere it is present.I know because I checked and I also saw, on the Internet, country-by-countryprice comparisons. Idem should hire a bright chap to conduct basic research forhim. The fact is no pay TV provider in the world operates a PAYG model, whichmeans none in Nigeria does. Curiously, other service providers are never partof the PAYG conversation. I am also aware that  DStv subscribers, who travel out of theirlocations are allowed, to suspend their subscription three times in a year fora period between seven and 14 days.

To be fair, Idem did not invent those lies,which actually germinated in some brains on the street, with the second aproduct of the legless assumption that the telecoms sector, where pay-as-you-gois the staple, and the pay television sector are the same. But they have beengiven some sort of official endorsement by relevance-seeking politicians, sadlywith little or no knowledge of what they are talking about.

Six years ago, a House member, Mrs. AishaDahiru Modibbo, raised similar issues on the floor of the House, where sherailed against ”rigid”subscription policy under which subscribers are billed “whether they are athome viewing programmes or not”.

Contributing to the debate, Leo Ogor, the then HouseDeputy Leader, wondered why Nigeria, a country in which DStv has a hugesubscriber base, does not get “subscriber-friendly offers” given to citizens ofother African countries. The oxygen the liesget from political quarters make them flicker and sometimes burn brightly untilthey peter out like they did a few years ago when something akin to a rogueoperator launched with the promise to make premium content available at bargainbasement prices as well as allow pay-as-you-go. For a few weeks, PAYG agitatorswere in seventh heaven. But during the brief spell that the operator, TStv, wasalive, it operated a fixed period subscription model.

PAYG, to those whodesire it, is the same as Pay-per-View (PPV), which they assume ensures thedelivery of pay TV programming a la carte-in the misguided belief that it is cheaper. Well, it is not. It is, in fact,way more expensive and it is not exactly Pay TV.

The PPVmodel is used in the broadcast special events, usually of the high-ticketvariety in sports and entertainment. It is available via cable and satellitetelevision subscription as well as via the Internet.

LastFebruary, the Deontay Wilder/ Tyson Fury heavyweight boxing rematch was sold onPPV at the cost of $79.99 (HD) and $69.99 (SD) to boxing fans in the US. In theUK, it cost £61 (HD) and £53(SD). It ended in the seventh round. It would have been the same if it ended inthe first round, as no refund is made.

Similar marqueematch-up, featuring Floyd Mayweather andConnor McGregor in 2017, was sold to viewers in America at $99.99 (HD)and $89.99 (SD). Four years ago, the blockbuster clash between Mayweather and Manny Pacquiao was sold for $99.5. All the threeepic contests were watched on DStv’s SuperSport at no additional cost to thesubscriber, a clear indication that PPV is not the cheaper alternative it isassumed to be.

The spark for the demand of PAYG is thetelecommunications sector, which is assumed to be the same as pay television.Clearly ignored when making comparisons is the fact that television companies,more often than not, buy the content they redistribute. The programmes, onaccount of the fierce competition among pay TV companies, are bought atnear-extortionate sums and contracts for them are renewed at a king’s ransom. Telcos, on the other hand, do a one-off payment for spectrum.Also, on the technological front, both fields are dissimilar. While telecoms istwo-way, satellite broadcasting is one-way, leaving broadcasters unable to knowif a subscriber is watching or not, as the signal is sent to the decoder, whichsends no feedback. Thus, for PAYG to be possible, a complete overhaul of thebroadcast architecture and billing model is required. This, if it happens atall, would cost an arm and a few legs, which will certainly make services farmore expensive.

Equallyignored in the discussions-and the Internet can always help- is the fact thatcontent redistribution contracts are not signed on a pay-as-you-watch basis.

Thismeans they cannot be sold as such except in Video-on-Demand services, which paytelevision-strictly speaking-is not.  Inmost parts of the world, the content aggregation/ bundling model remainsdominant in the pay television ecosystem because it is the most cost-effective.For example, households with mildly varying TVprogramming tastes are sure to benefit from having every member on the samebouquet. This way, the content valued by each member of the household is delivered in an economically viable way.

Tychus, an economist, writes from Jalingo