MultiChoice Group CEO Calvo Mawela confirmed on Thursday that the broadcaster is considering offering smaller, cheaper channel bundles, known in the industry as “skinny bundles”, but said that no decision has been made about going down this route.
He told TechCentral in an interview that MultiChoice is conducting research with a select group of customers into whether if it would make sense to introduce skinny bundling — essentially smaller bundles offering at lower prices — into its offerings.
He said research like this is conducted often inside MultiChoice, particularly to test new ideas in broadcasting that are gaining currency internationally to see whether they have merit in the South Africa and broader African markets in which the group operates. The idea of the research, he said, is to understand customer preferences and how consumers would respond to such offerings being available to them.
“It’s continuous research in a number of areas, including skinny bundling, and no decisions have been made,” Mawela said.
Thinus Ferreira, a broadcasting industry journalist, wrote on his TV with Thinus blog in September that MultiChoice was “testing breaking up its combined entertainment and sports channels” and unbundling these by offering a “cheaper, yet still premium collection of entertainment TV channels in a so-called ‘skinny bundle’, now sitting alongside an optional add-on package of sports channels”.
Such a change, if it were to happen, would be a significant change in strategy for MultiChoice, which has historically tightly integrated its SuperSport channels with its channel bouquets. For example, viewers who want the popular M-Net entertainment channel must subscribe to the full suite of sports channels, if even those viewers are not interested in sport.
Churn
The aim of the skinny bundles, Ferreira wrote, would be to try to limit the churn of high-value, premium-tier subscribers, who have in recent years been cancelling their subscriptions, either due affordability issues or the growing selection of alternative streaming offerings in the market, including Netflix.
Asked on Thursday if he believes MultiChoice needs to rethink its offerings for the premium segment, Mawela admitted that this end of the market has been taking strain in South Africa specifically (the Compact+ bouquet, which is also grouped in the premium segment has been growing well elsewhere in Africa).
Mawela said customers who are cancelling their premium-tier subscriptions are doing so mainly due to affordability, especially given the weak economic conditions in South Africa.
Eventually, he said, the haemorrhaging of premier-tier customers (those on DStv Premium and Compact+) will come to an end.
He said MultiChoice is not “sitting in its laurels” and is working hard to retain those customers — for example, by adding value-added services such as free access to Showmax, the streaming platform also owned by MultiChoice. The group is also working to add new content to the top-end tiers to “ensure we stay competitive in this segment”.
In the most recent six-month period, the rate of decline of premium-tier customers has improved, he added. “This first half (of the financial year), the number (of premium-tier customers) declined by 5%. Previously it was 8, 9 or 10%.”
The full-year results to March 2022 will provide a clearer picture as to whether MultiChoice has started to arrest the decline in premium subscribers, Mawela said. He added that some premium-tier subscribers who had left returned in the most recent reporting period due to a strong slate of sport, particularly rugby, whereas a year ago, during the height of the Covid-19 pandemic, very few live sports were being played. – © 2021 NewsCentral Media
