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Our expenditure on local content to increase - Multichoice boss

By Samuel Sanya

Added 27th December 2016 11:20 AM

MultiChoice, the company that owns the popular DStv (Digital Satellite Television) service in Africa is revamping its strategy.

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Tim Jacobs(L), the Multichoice CEO in Johannesburg, South Africa

MultiChoice, the company that owns the popular DStv (Digital Satellite Television) service in Africa is revamping its strategy.

MultiChoice, the company that owns the popular DStv (Digital Satellite Television) service in Africa is revamping its strategy. The New Vision’s Samuel Sanya spoke to Tim Jacobs, the Multichoice CEO in Johannesburg, South Africa about the new strategy, below are excerpts of what he said:

Qn.
What are the major influences behind the new Multichoice strategy?

Ans. There have been price increases over the years, currencies have also been devaluing; generally as a continent we have devalued against the US dollar. We have been listening to our customers and we had a choice to make. We looked to the future in 10 years’ time and asked whether the current business model is sustainable. We did statistical research in our biggest markets and realized that we need to reduce our prices.

This will affect our shareholders, however, in the longer run we believe that can get a larger number of subscribers.

The price reduction in each country is slightly different because of different taxes. Reducing prices means that customers can easily access the kind of content that they like, for instance, football lovers will find it cheaper to access games. Reducing the prices is just one aspect of the changes. The price reductions will be material between 5% and 30% for the family package.

The second change is to strengthen the bouquets and add more content.

We recognize that there is significant economic pressure across Africa at the moment coming from currency depreciations, and high inflation which have affected people’s ability to spend money every month. People now have to make hard decisions about where their money has to be spent. We want people to able to watch television, whether it is news, sports, or children’s programming.  We also intend to add more content and strengthen bouquets at cheaper price points to make it more attractive and more valuable for people.

We intend to make it cheaper for people to acquire our products. It is one thing to have a product that people want and another for them to buy it. We are giving our teams the ability to have strong marketing campaigns, to discount and subsidize the cost of acquisitions to that we can really appeal to a much broader population in the markets where we operate in.

We will take a financial hit immediately, but we think that we will break even in three years’ time and then the revenues from the volumes will start to make business sense and we will start to recover the profitability after that. Due to our increased satellite capacity we are adding a lot of free to air channels, on both GoTv and DSTV.

At the same time we are redirecting our spend on 3rd party international channels and local channels; we are still trying to get the best of what the international channels have to offer but we are spending less and less there and redirecting that to local channels that resonate with our audiences. Our marketing department has come up with a campaign that resonates with the customer; such as using Ann Kansiime with her ninja’s in Uganda and Basket Mouth in Nigeria. We are leveraging on them and their audiences, and we think it is a very innovative way to communicate with our customers. Over the next 5 years we need to double our base from 2.1 million for DSTV and about the same amount for GoTv.

Qn. Is triple play (pay tv, internet broad band and telephone services) something you are looking into?

Ans. No. The problem with broad band is that you need physical fibre cable and you need a massive investment. We are in 50 countries across Africa and in every market where we operate telecom companies are busy laying fibre cable, how to do we compete with that? We are instead partnering with telecoms that offer telecom broad band and voice but want to offer triple play. If we moved into triple play it would make Tv too expensive for most consumers. Right now, the mobile revolution has just exploded across the continent so we are trying to make television available over the mobile phone in the future.

Qn. There is an ongoing demographic shift; we see more millennials (born in early 1980’s and 1990’s) joining the workforce. How do you intend to make yourselves relevant to this group?

Ans. One of the strategies is that we are shifting what we spend on international content; we are increasing what we spend in local content and soaps. In Tanzania, we have what is called Bongomagic, in Kenya we have Maishamagic, and we have Zambezzimagic for some of the Southern Africa territories. Each year we are adding we more localized programs such as Jangomagic in Angola.

It is not so much about the population size but more about the behavior and dynamics of that consumer. There is also the economics of whether the population will pay for the content or whether they are going to pirate it. It is a combination of factors that ultimately determines whether we launch more local programing.

Qn. Where do you see the company in 10 years’ time?

Ans. We have to try to be as relevant as we can as a PayTv operator and we need to make our products accessible via mobile and online. So our task is not just to be a satellite Tv provider, but also to make our products accessible that is why we are looking at partnerships.  If we do that we will be relevant for much longer.

We will always invest first in markets where there is traction.  We intend to carry as many local free-to-air television stations as possible and some popular international free-to-air television stations. What does this do for them? We give them distribution and more eyeballs, which is what drives advertising revenue. In selected instances we do partnerships with free-to-airs where we ask them to put some their archive content on platforms like Showmax which competes directly with Netflix.

It is not inconceivable that the business model will change over the next 15-20 years’ time; however, the good thing about Africa is that access to broadband and affordable data levels are lagging the rest of the world. So if we look at the next 10 years we have a key role in bringing television and key content to the African continent.

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