The Nigeria House of Representatives has again rejected the hike in subscription prices by owners of DSTV, Multichoice Group and insisted that the company should introduce a Pay-Per-View (PPV) billing model.
A house committee had earlier been set up to investigate Multichoice over alleged unfair billing after the company increased tariffs on its DStv and GoTV bouquets.
According to the Committee Chairman Rep. Unyime Idem, the house maintains its stance that the PPV model is possible. He accused Multichoice of exploiting Nigerians amid the COVID-19 pandemic by hiking DStv/GOtv monthly subscription fees.
However, the Chief Executive Officer (CEO) of Multichoice Nigeria, John Ugbe has explained that it would be impossible for the PayTV provider to implement the PPV model.
We are yet to see a pay TV business anywhere in the world that does PAYG in the sense intended here. We do not believe the model is technically or commercially feasible.John Ugbe, CEO Multichoice Nigeria
Ugbe stressed that unlike mobile telcos which provide two-way communication services, the satellite broadcasters’ one-way transmission means that they are unable to monitor subscribers’ connection to the service and estimate the duration spent.
According to him, Multichoice will have to be completely restructured technically and operationally to operate a PPV model in Nigeria. He stated that this implies that subscribers will be charged much higher tariffs if the PPV billing system is to be implemented.
Can PayTV Operate the PPV Model?
Throughout its pricing tussle with the Nigerian Parliament, DStv has maintained that it is not technically and commercially feasible to operate a PPV model in the country.
In 2018, however, John Ugbe had said DStv was looking to introduce PPV in Nigeria stating that the “the Pay-Per-View option would reduce costs on the part of consumers in the sense that DStv would charge them according to their consumption only and exclude interference.”
Also, he pointed out that the DStv PPV pricing would be implemented only if Multichoice had the available technology and business model to permit it.
What this means is that it is technically possible for pay TVs to operate a PPV billing model. But it is evident that the Multichoice business model does not support PPV as there is no DStv PPV billing option available in any of the 50 African countries where it operates.
In Nigeria, DStv competitor Startimes has introduced a type of PPV pricing system on all its bouquets where customers can subscribe daily, weekly or monthly and still access the same channels. Ideally, a PPV model means that subscribers are continually charged each time the service is used as is the case with mobile telcos’ metered services.
Globally, pay-TV companies do not run a PPV model. However, some pay TVs including Sky UK and DirecTV US offer the Pay-Per-View (PPV) pricing option. PPV attracts even higher tariffs as subscribers have to pay additional fee asides their active subscriptions to watch special events.
The PPV model might be difficult to implement for pay-TV providers compared to mobile telcos. Mobile telcos usually make a one-off payment to buy spectrum while pay-TV providers have to continually buy content subject to an abrupt price increase for broadcast.
Judging by this, the PPV model may not be commercially feasible for pay-TV operators like Multichoice.
FG May be Forcing DStv Competition
While it appears that the government’s DStv PPV stance is in the best interest of Nigerians, it could also be part of a ploy to encourage competition in the country’s pay-TV sector.
DStv dominates the Nigeria Pay TV market, possessing up to 14 million subscribers, more than twice that of its closest competitor. Startimes has over 4 million subscribers.
The government has been working to reinvent its largely ineffective satellite service, Nigerian Communication Satellite (NigComSat) which launched Direct-to-Home services in 2017 “to challenge the leading operator in the business DStv.”
Interestingly, Rep. Adedeji Babjide, a member of the DStv investigating committee questioned why DStv was not patronising NIGCOMSAT and alleged that Multi choice was not fully abiding by the Nigeria Broadcasting Commission (NBC) Code.
Recall that the revised NBC code had controversially classified content exclusivity as illegal. Exclusive contents such as DStv’s English Premier League (EPL) rights are what give the pay TV a big advantage over others in Nigeria.
Several football viewing centres and private individuals subscribe to DStv just to watch the EPL matches.
The government’s unbending refusal of the Multichoice tariff model may be another means to reduce DStv’s market share and encourage local pay TV competition.
Since Multichoice increased subscription tariffs twice in the space of three months, Nigerians have been calling for a DStv/GOtv PPV model. Many seem to have the idea that a DStv PPV billing model would reduce the amount they spend watching the pay-TV.
In practice, however, the opposite could suffice.
While the PPV system will be more flexible, subscribers would probably pay more to get the same services. A subscriber paying N7,900 for 720 hours on DStv Compact may end up paying N1000 for a 2-hour football match.
Having said that, it remains to be seen whether Multichoice and the government can reach an agreement on the DStv pricing going forward.
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