South Africans do love a good moan. Whether it’s Eskom’s rolling blackouts or the state of the country’s politics, we seem to find a measure of comfort in a good old groan, whether it’s done quietly over the dinner table or by venting our spleens publicly on Twitter or Facebook.
One of the companies South Africans love to hate is MultiChoice. People breathe fire about the price of its DStv’s bouquets and about the fact that the company doesn’t allow subscribers to build their own packages from an a la carte menu of channels. Why should I pay for the lawn bowls channel if I only want the action movie channel, they ask.
They threaten to abandon the service the moment a decent competitor comes along, disparagingly labelling the Naspers-owned operator as MonoChoice or NoChoice.
But is this criticism warranted?
In international terms, DStv’s prices are not out of kilter. Direct comparisons are impossible, but for similar bouquets, DStv is not overpriced when compared to linear broadcasters like Sky in the UK and Comcast in the US.
It’s true that international providers tend to have more product options — some bundle broadband and calling plans with their offerings — but price-wise, when matched for content, MultiChoice is not wildly expensive, especially given the decline in the value of the rand in the past year.
The problem is that South Africans don’t have much by way of choice in pay TV, at least at the more affluent end of the market. Indeed, DStv’s R665/month Premium bouquet doesn’t have a direct rival against which consumers can compare prices and channels.
StarSat — formerly TopTV — was barely out of the starting gates when it was placed into business rescue. The company also decided against targeting the top end of the market, preferring to try to tap the emerging black middle class. MultiChoice went after that market, too, launching its lower-priced Compact bouquet, and to much greater success. It had a better product.
Although MultiChoice, and the M-Net business from which it emerged, enjoyed a fairly sheltered existence in its early years, the market has been open to newcomers for at least a decade. When DStv was launched, it was meant to have a competitor in the form of the SABC’s AstraSat. But the SABC ran into funding difficulties — and made the costly mistake of choosing analogue broadcasting technology just as the world was going digital.
Telkom attempted to enter the pay-TV market about 10 years ago and failed, wasting hundreds of millions of rand before pulling the plug. Other prospective pay-TV broadcasters were licensed, but, with the exception of TopTV, failed to get off the ground.
Critics of MultiChoice will argue that the company has become too dominant, that it’s virtually impossible to compete against it, and that the only way to open the market to competition is for regulators to intervene aggressively, forcing it, for example, to share its sports content with rivals.
But do we want to punish a successful business in this way? MultiChoice is in the position it is (mostly) because it’s been smart about the way it’s approached the market, offering consumers what they want at prices they’re prepared to pay.
And those arguing it should be forced to allow its customers to pick and choose the channels they want to subscribe to should take heed of comments by Vino Govender, the former CEO of On Digital Media (ODM), the company that operates StarSat.
A few years back, Govender said in response to an inquiry by the National Consumer Commission that allowing customers to pick and choose channels in this way would force ODM out of business.
The market is changing, anyway. Streaming services like Netflix, which is launching in South Africa soon, pose a new competitive challenge.
Indeed, the entire business model of broadcasting is going to be upended by broadband in the next five to 10 years as the world moves from linear television to on-demand streaming.
By 2025, MultiChoice may be just one firm vying with a host of aggressive local and international online rivals for viewers’ attention.
That should give South Africans one less thing to grouse about.
- Duncan McLeod edits TechCentral. Find him on Twitter
- This column was first published in the Sunday Times