Multichoice’s DStv Loses Premium Customers Despite Recording User Growth of 400,000

Mulitchoice's DStv is Losing Premium Customers Despite Recording User Growth of 400,000

Naspers’ Multichoice, owners of DStv, has continued to post noticeable growth in its customer base despite the challenges it has been facing. The pay-tv company’s subscriber base grew by 400,000 over the last 12 months according to an interim financial report by its parent company.

Presently, the total number of Multichoice subscribers stands at 13.9 million, up from 13.5 million. Naspers attributes this result to strong growth in the middle and mass market segment.

Beyond customer growth, the video-entertainment division also recorded some noticeable revenue growth. Revenue from Multichoice grew by 3% to $1.8 billion. Across Sub Saharan Africa, revenues grew by 9% to $524 million. Meanwhile profits also rose 6% to $211 million.

These results seem positive and show somewhat that Multichoice, and its DStv service, still has plenty of growth potentials. The company had been mucked by a lot of negative news this year. First, its Nigerian subsidiary was litigated and ordered not to increase the cost of its services. Then Netflix became a huge threat, which Multichoice blames for its stalling customer growth in South Africa. And finally, Naspers, its parent company, announced plans to spin of the company.

So a positive customer growth story should change its narrative right?

Not quite, because although these results seem impressive for the struggling company, it doesn’t tell the full story.

Noticeable Loss Of Multichoice’s DStv Premium Customers

While Multichoice’s overall customer growth has been relatively impressive, it is losing customers in an important segment. According to the financial report, the company has been losing premium subscribers over the last 12 months. This has had a noticeable effect on its average returns per user (ARPU). Despite growing its customer base by 400,000, the drop in premium subscribers reduced ARPU from $27 to $25.

Naspers tried to play down this drop, referring to it as “some churn.” It further attributed the drop to “strains in disposable income” of these customer segment and not necessarily on its competition. This may be true to an extent, as several African countries battle with economic difficulties caused by declining commodity prices.

However, a more reasonable explanation could be that premium customers are moving from its DStv pay-tv and streaming service to competitors, most especially Netflix.

With stale or less original contents on the Multichoice DStv service, Netflix has been keen to take advantage. The company keeps drawing customer attention by deepening its pool of original content production. Early this year, the American company announced it had budgeted over $8 billion for original contents across several regions. And Africa has been a top choice for this investment

And over the last few years, it has also purchased licenses to some of Africa’s popular movies such as October 1, Lion Heart, the Wedding Party and others.

Considering these and the deep pool of resources Netflix has, it is not surprising that Multichoice is losing premium customers.

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