September 22, 2022

Multichoice, stakeholders reject ‘Pay-per-view’

…Say it will be difficult to implement it 

By Henry Umoru

MULTICHOICE Nigeria and other Stakeholders in the broadcast communication sector have totally  rejected a proposed pay-per-view for pay TV. 

Almost all the stakeholders that made presentation at the public hearing on “Pay-TV Hikes And Demand for Pay-per-view subscription model,”  organised by the Senate Adhoc Committee chaired by the Deputy Chief Whip of the Senate, Sabi Abdullahi, told the Senate that  the pay-per-view was  not in the interest of consumers.

According to the Stakeholders including a major cable television firm in the country, MutiChoice Nigeria, the pay per view model being canvassed by the Senate as against the current monthly billing, was difficult to implement and that it would further hurt the economy. 

The Stakeholders spoke Wednesday at a one-day public hearing organised by the Senate Adhoc Committee that is at the moment investigating Pay-tv hikes and demand for the pay-per view subscription model in Nigeria.

Various stakeholders that made presentations before the panel, noted that the idea of pay per view being canvassed by the Senate was not feasible, just as they also explained that the current harsh environment which firms were operating under in Nigeria, was not making it possible for the firms  to reduce their prices.

Aside Sabi Abdullahi, other members of the Committee are  Senators Michael Nnachi, Suleiman Abdul Kwari and Abba Moro, who moved the motion for the Senate to probe the incessant price hike by cable television operators.

In his presentation, the Chief Executive Officer, CEO,  MultiChoice Nigeria, John Ugbe who disclosed that  for the past 27 years of their operations, they are licensed and  that the free market economy is not favourable to pay-per-view, said that  they operate within that framework of the business environment in Nigeria, said pay TV operators, just like others should have the freedom to determine their prices. 

According to him, several legal and legislative moves made to compel the firm to operate per view model did not work because it was not feasible. 

Ugbe said, “Whilst it may appear to be a noble intent for this Committee to be concerned over the rising cost of subscription services; however, the Pay-Per- View (PPV) model being canvassed by this Committee will not work either to the benefit of the consumer or the industry.  

“Pay television services compete with other services for subscribers’ disposable income, including existing broadcasting services (public, commercial free-to-air and other pay television services), and other entertainment services, such as YouTube, Facebook, cinemas, video rental outlets and DVD retailers.

“The demand for pay television services fluctuates and is very sensitive to the price a subscriber has to pay and affordability factors. For example, demand may be higher during December when subscribers have more discretionary income or are willing to spend more on entertainment and lower during other periods in the year, i.e we see subscribers switching off the service in January when children go back to school and school fees have to be paid. This places constant pressure on MultiChoice to always be price-sensitive.

” If the subscription fees are either too high or too low, the pay television service will fail.  If the subscription fees are too high, the subscribers will unsubscribe, or will not subscribe in the first place, and the business will be unable to gain the critical mass necessary for its survival.  Similarly, if the subscription fees are too low, the business will be unable to cover its expenses and will inevitably go insolvent.

“It would appear that this problem is because of some confusion in understanding the basic definitions and distinctions between some of the existing operational business models in telecommunications and pay-tv broadcasting. 

“A pay per view PPV is Not the same, and is Very different from Pay As You Go (PAYG). 

“The PPV model allows a subscriber to watch some special one-off events, usually of the high-ticket variety in sports and entertainment, by paying for such events in addition to having an active subscription. 

“Pay-As-You-Go, accommodates a metered mode of service, where consumers are billed only for the service they consume and not for a fixed period. 

“The desire by this Committee to adopt PPV is further challenged by the nonexistence of any technology that can detect and or determine the viewers are tuned in per time. 

“Once it is impossible to have this knowledge, billings based on “per view” become difficult if not almost impossible. 

“In determining subscription fees, MultiChoice takes into account many factors, including inflation, increasing input costs, ever escalating costs of technical upgrades, the impact on subscribers and the exchange rate fluctuations. 

“The costs of satellite pay television are massive, ongoing and increase, rather than decrease, with time. Due to the current adverse economic situation, some of these factors which we discuss in detail below have over the years negatively impacted our cost of doing business and have put us under very challenging conditions.  MultiChoice has made immense contributions to Nigeria’s GDP from FY2014/15 to FY 2020/21. 

“The aggregate economic impact over the past five years is estimated to sum to around $2.5bn. By March 2021, it had rolled out the GOtv network across all six geo-political zones of Nigeria, providing coverage to close to 5 million Nigerians. 

“With a total of 81 transmission sites, the cumulative spend on transmitter sites alone amounts to N25 billion, 69% of which was spent locally.  MultiChoice has provided decoder subsidies to its customers worth N32 billion over the last 5 year period. It has further supported the government’s efforts in educating the public about digital migration and has run a digital migration themed marketing campaign across the country.

“It is therefore my humble submission to this distinguished committee that due to the nature of content acquisition and technological limitations that PAYG model is not practical for broadcasting and thus is not practiced and basically cannot be implemented anywhere in the world.”

Also in his presentation, former NBC DG, Emeka Mba who noted that a pay per view (PPV) is not the same, and is very different from pay as you go (PAYG), said that the issues of Pay-Per-View(PPV) and Pay-TVpricing, have been the subject of several investigations by the National Assembly, the regulatory agencies and courts in the past.

Mba who disclosed that in 2015, a Federal High Court sitting in Lagos, dismissed a suit by two Lagos based legal practitioners, seeking an order for the reversal of MultiChoice price increase, said,  “The applicants had prayed the court to order the National Broadcasting Commission (NBC) to restrain MultiChoice from implementing a scheduled price increase and also implement the pay-per-view plan where subscribers could choose the programmes or channels they want and pay as they watch.

“The Court held that the Plaintiffs were not under any obligation to continue to subscribe to the 1st Defendant’s products if unsatisfied with MultiChoice subscription pricing. The suit was thereafter struck out for disclosing no reasonable cause of action.”

Also in his presentation, the CEO of Billsbox Services, Dr Monday Michaels Ashibogwu who noted that  the assumptions around PPV being better are incorrect and are underpinned by a misunderstanding of the model, said, “The simple definition of PPV is a system under which a viewer is required to pay a certain fee for viewing special programmes such as live events or sports. The programme is broadcast at the same time to everyone subscribing to PPV service. Examples of content available on PPV include big-ticket boxing, WWE, UFC .

 “Pay-Per-View (PPV) means the viewer pays for only what is watched at a fixed broadcast time. The addition of PPV to a package grants viewers access to programmes on a pay per view basis. In fact, this means that viewers purchase individual programmes they desire to watch on a specific PPV channel. The payment is specifically for a programme, show or event.

“Most prominent of PPV offerings are sporting events such as WWE, boxing UFC and other live event shows.  That the programmes are broadcast live means that they run on at a fixed time and are not subject to the control of the television package owner, who is more or less a vendor. PPV is essentially a pay as you use feature that is added on, upon payment for specific content, to a pay television package. It is a stand-alone.

“While  it is commendable that the Senate cares about consumers, there must also be empathy and care for businesses. It will do the country no good for foreign investors to get the feeling that an arm of the Nigerian government is an adversary of investors. It is our hope that your investigation will throw light to the market realities, regulatory framework and international best practice.”

On his part, the Coordinator, Nigerian Viewers Collective, Mr Anthony Iyare who stressed that Nigeria must desist from inflicting further pains on the economy via strangulating their operations, said, “We are aware that inflation in the country is now over 20 per cent, the highest in 17 years. The content which they offer is bought in dollars and there has been a geometric drop in the value of the naira to the dollar. Government itself has increased the prices for almost all its services.

“The prices of services and consumer goods, including household ones, have risen astronomically and continue to do so in the last three years. Local and international economics dynamics are responsible.

“Pay TV service providers are not insulated from economic vagaries. Even the government, part of which the esteemed committee is, has raised the pump price of fuel. Diesel and aviation fuel prices have shot up beyond belief.

“The broadcast sector, which includes Pay TV companies, was ignored when palliative measures given to other sectors at the time Covid-19 came to shred finances. For them to remain in business and to continue to maintain the same standards or improve on such, requires them to charge rates that reflect economic realities. Pay TV service providers are victims as much as their subscribers or customers.”

On their part,  Dr. Bright Echeffe, the Chief Executive Officer of TSTV and Tunde Aina Chief Operating Officer of Startimes  said that  Cable TV operators could adopt pay per day model to ameliorate the pains of poor subscribers. 

In his presentation, Echeffe said, “Pay per view is not feasible but we came up with pay per day. We also allow our subscribers to choose the package based on the numbers of channels they wanted to watch.”

In his remarks, the Ad hoc committee chairman, Senator Aliyu Sabi Abdullahi who noted that they do not want to undermine the freedom of the Pay-Tv, but that in a span of six years, there tariff has increased up to 55 percent, said, “We need to have price regulation. Price increases need to be regulated. NBC from all intent and purpose are the problem of the country when it comes to pay TV.”

He said for NBC to have made a presentation in a paper without their letterhead and not signed by the DG of the agency, makes it a street presentation, just as he said that  the Senate set up the adhoc panel based on a motion approved by the Senate at plenary, adding that the motion stated  that various packages of the multichoice bouquet had been increased by 80 per cent in the last five years.

Abdullahi who noted that the development was not in the best interest of the subscribers especially when a Court had cautioned the Multi Choice against carrying out its latest increment which it introduced on March 30 this year, however assured the stakeholders that the Senate had not taken a position on the matter and that the report would be based on the memorandum they had submitted to the panel. 

The President of the Senate, Senator  Ahmad Lawan who was represented by the Senate leader, Abdullahi Ibrahim Gobir  said that  Nigerians will always go for services that are good and affordable. 

Recall that Senator Abba Moro who moved the motion had said that the public hearing was prompted on the fact that the pay TV especially the DSTV needs to be considerate in their services.

According to him, he believed that the pay-tv should be considerate in their bouquet and that hMulti-Choice, which is the operators of DSTV and GOTV, has over two million subscribers. 

He chronicled the incessant price increment since 2009 till date, saying “Multi Choice increase prices without recourse to the economic reality without adopting the pay-per-view. 

“DSTV, GOTV will be reaping Nigerians if they consistently shunned the pay-per-view which could ameliorate the hardship being faced by the subscribers.”

In his presentation, the Deputy Director, Research and Policy at the National Broadcasting Commission, Anete Onyebuchi, who represented the Director General said the agency had no enabling law to either regulate or control the prices being charged by the cable television operators. 

Onyebuchi said, “There are negative reactions whenever MultiChoice increases it’s price and the NBC is concerned. 

“However, the NBC Act only gives it power to receive, consider and investigate complaints regarding broadcast contents. Nowhere in the Act was the NBC given powers to regulate the prices being charged on their services.”

He, therefore  urged the National Assembly to amend the NBC Act to give it powers to regulate prices in the industry.

Onyebuchi nevertheless said the agency will continue to engage the operators in order to ensure sanity in the industry.

On his part, the Director, Tax Policy and Advisory, Federal Inland Revenue Service, Temitayo Orebajo who noted that  the cable TV operators are concerned about making profits despite the harsh operational environment, said, “The MultiChoice for instance, express fears that replacing monthly billing with pay-per view, will reduce their revenues. 

“However, the FIRS believe that the migration will not affect their income, rather they would get more subscribers.”

Abubakar Ladan, who represented the Minister of Communications  also stressed the need to amend the NBC Act to enable the agency sanction airing Cable TV operators, adding,  “We need to review the NBC Act in response to the dynamic and reality on ground, in the interest of the poor subscribers.”

Ladan, who is the Director/ Secretary, Frequency Management Council, pledged that the ministry was doing everything to protect the interest of Nigerians.