Africa’s largest PayTV service, Multichoice Group has signed a Memorandum of Understanding (MoU) with American streaming services, Netflix and Amazon with the aim of onboarding both services unto its own decoders.
The move, captured under the Improved Retention section of Multichoice’s result presentation, is in a bid to help the satellite TV provider retain its subscriber base that has been dwindling in the face of increased competition from digital streaming platforms like Netflix.
With African countries becoming increasingly particular about broadband penetration, internet service is becoming cheaper with slight improvements to its quality. This has enhanced the adoption of streaming services on the continent to the detriment of satellite TV, a situation Multichoice has battled to stem since it exited Naspers in February of last year.
Multichoice has its own streaming service called Showmax but it has struggled to break away from the dwindling fortunes of its parent service. This is because Netflix and Amazon hit the continent with original and sometimes exclusive foreign content while Showmax is just an extension of Multichoice with largely the same content.
But all that might be about to change with this new deal which would see Multichoice broadcast Netflix and Amazon contents on its platform.
Aside from the benefit of retaining its subscribers, the new deal would also generate some revenue for Multichoice. Chief Financial Officer (CFO), Tim Jacobs told Bloomberg that the deal also has a commissions aspect to it that would see Multichoice generate funds from onboarding those two streaming services.
“What would typically happen is we would get commission on whatever revenue gets generated by customers coming from our platform”Tim Jacobs, CFO, Multichoice
What works for Netflix and Amazon
While streaming services appear to be growing in Africa, many thanks to exclusive foreign and local content and slightly improved internet access and quality, the truth remains that broadcast contents can only reach much of the continent through satellite TV.
According to a recent study, nearly 44% of the global population without access to the internet are in Sub-Saharan Africa.
With more than 1.3 billion people, only about 526 million people are connected to the internet in Africa. This puts the internet penetration rate at about 39%. This means streaming platforms have only 39% of the African population to target.
Factors like exorbitant cost of internet, lack of digital literacy, lack of quality smartphones and dismal poverty rate which would make monthly subscriptions a luxury would drive that target even further down.
Satellite TV, on the other hand, has farther reach and could target an even wider segment of the African population. Thus, Multichoice could help broadcast these original and exclusive content from streaming services to viewers even in the remotest parts of the continent.
There is also the revenue to be generated as rightly pointed out by Mr Jacobs. The presence of commissions indicates the presence of sales which in turn implies that this deal would also be of great financial benefit to both Netflix and Amazon.
Collaboration rather than competition has always been the way forward especially in a market like Africa with all its unique imperfections. It is good to see PayTV services recognizing their own shortcomings and collaborating to take advantage of each other’s strengths.
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