Multichoice consolidates its market strength in Africa

 Multichoice consolidates its market strength in Africa

With the sharp downturn in the global economy, there is avid concern that consumers will cut  luxury expenses, including their pay TV subscriptions, but the pay TV industry quickly fought the much anticipated subscription apathy through the aggressive marketing campaigns that target the low income, underserved segment of the consumer market and this very lucrative segment of the satellite industry move passed the global economic stress without a sting.

During the recent campaigns, subscription rose above normal levels, says a Multichoice insider, but a large numbers of those subscribers have also resumed their subscriptions. As times get tougher, Multichoice Chief executive John Ugbe is optimistic that people will stay at home and watch TV. However, the lesson of the recent campaigns was that aggressive pricing strategy can leverage subscription growth in the short term. A senior corporate executive has described the recent drive as scheming campaigns similar to the marketing model of the mobile phone providers that was premised on launching a relentless drive to acquire customers, which as he put it,  the logic behind the marketing blitz was subscribe first, profit second. Incidentally, subscriber’s growth has been strong.  More so, the cost of acquiring the new customers is expected to be recovered from high profit once the pay TV operators acquired a critical mass of subscribers.

 

Rising Subscription costs

As people increasingly stayed glued to their TV sets, the need for worldwide distribution of news, sports events, your preferred TV channels or the oratory speeches is growing higher. So once a subscription is activated by a subscriber, it is sure to become a lifelong relationship. But activating a subscription is one thing, but sustaining subscription span has come to depend on host factors.

However, yearly, DStv often launch a relentless drive to acquire new customers. Subscribers first, profit second was the logic behind the marketing blitz as DStv emulated the successful business model of the pay phone operators.  The cost of acquiring new customers was expected to be recovered from high profit once DStv achieve a critical mass of subscribers. DStv channels most of its resources to developing distribution channels and subsidizing the cost of purchasing set-top boxes.

In the early 2015, the set-top-boxes once sold at about 20,000 naira were subsidised and sold to new customers at give away price of just 11,000 naira. While the monthly subscription cost have been step up in many cases, DStv newly sign on were offered waivers on one month subscription. Nigerians who have become overwhelmed by the outward show of gesture by the pay TV provider began to install DStv dishes on their roof tops. The outcome was that DStv attracted over a million subscribers in 2015, although subscriber acquisition cost skyrocket and the average revenue per subscriber slummed.

In parallel to the previous year marketing drive, DStv worked to overcome programme deficiencies by offering interactive based services and by adding HD high definition channel to a standard definition channel. The company also introduced new channel and service bouquets to its line up. DStv continues building it marketing base than the previous year. A tough nut to crack was penetrating multi-dwelling unit marketing apartment commonly called estates. About 50 per cent of families and individuals live in apartments, generally called estates. Indeed, several corporate organisations have contemplated building new estates, and this has become another new account on the battle line.

One feature of the pay TV in Nigeria is the modest subscription rate compared to other countries. Subscription fee are the bread and butter of pay TV business, which has few alternative sources of income.

 

Building next generation end users

In 2010, DStv introduced PVR decorder and later the HD Explora service, offering new dimension to its customers. The service enables customers to pause live broadcasts, play them later and to automatically record programmes. Higher quality programmes and enhanced customer service along with the next generation satellite technologies will determine the success of DStv in the nearest future. DStv has already chosen one new technology called H. 264. This technology will guarantee a multichannel HD services that will help transform the era of colour TV into the era of HDTV. Once DStv has built a powerful platform based on the next generation satellite technology, it will re-invent itself to become active agent in the convergence of broadcasting and telecommunications.

 

Regulatory Environment

The Nigeria broadcasting commission have offer the best staple for the operators, as there remain no hard views on the scale of operations or scope of services rendered by the pay TV operators. It is often styled as the freest Pay TV market in the world.

In terms of satellite operators in the wholesale or transponder business, DStv has booked capacity on the European owned Eutelsat W3 satellite system. The deal size could not be confirmed but it is understood that the deal is signed for around 15-20 years. DStv has booked four transponders, with an option to add four transponders after a year on Eutelsat. Eutelsat’s contract with DStv, in an analyst‘s view at least, is an indication that the market is indeed opening up. Other regulations are also being initiated by the government.