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Pay TV business still growing, says DStv chief

By Vision Reporter

Added 26th August 2008 03:00 AM

RICHARD Tembedza is the director of joint ventures at MultiChoice Africa. He was in the country to review their business operations. He spoke to Sylvia Juuko about competition and future prospects

RICHARD Tembedza is the director of joint ventures at MultiChoice Africa. He was in the country to review their business operations. He spoke to Sylvia Juuko about competition and future prospects

RICHARD Tembedza is the director of joint ventures at MultiChoice Africa. He was in the country to review their business operations. He spoke to Sylvia Juuko about competition and future prospects

QUESTION: How has the landscape changed with the entrance of GTV more than a year ago?
The entry of GTV has stimulated growth of our business in Uganda and across the continent.
The publicity and fun-fare that accompanied the competitor’s launch assisted in improving awareness of the pay TV concept in the African market.

Competition has enabled the consumer to have something to benchmark DStv against.

The surge we have experienced in our subscriber base since June last year, confirms the value and superiority of DStv against other players in the market.

The key to success in this game is variety – the ability to offer enough channels per genre in your bouquets of channels to ensure they fulfil the entertainment needs of each member of the household.

Has it changed the uptake of DStv?
Indeed. We are seeing good growth in our subscriber base.
We have three bouquets of channels - the Family bouquet with over 25 channels ($19 per month), the Compact bouquet with over 33 channels ($25 per month) and the Premium bouquet with over 55 channels ($71.5 per month).

Through tiering, we have been able to segment the market in a way that enables customers to subscribe according to their ability to pay - so we cater for all income levels yet even in the lower priced bouquets, we offer some of the best channels.

Most of our growth in the past year has been on the Compact bouquet because it’s affordable and has some excellent programming like the reality shows (Big Brother) and the Africa Magic channels, which showcase African talent.

A unique advantage our subscribers have is the ability to upgrade/downgrade between bouquets depending on their viewing needs.

How big is your subscriber base in Uganda?
Our subscriber base in Uganda has increased by 26% in the past 12 months. This is on top of a 46% surge in the previous 12 months.

We publish subscriber numbers at the end of each financial year but do not disclose numbers during the current financial year. By March 31, our subscriber base in Uganda was 20,000. Growth in Uganda compares well with the annual growth in sub-Saharan Africa of 25% as at the end of March 2008. We are confident the growth we are experiencing now will continue even as the global economy falters.

DStv provides entertainment in your own home and as subscribers reduce indulgencies like eating out and going to movies due to the high inflation rates now, they are likely to seek cheaper entertainment in form of good movies, sports and documentaries to watch on TV in the comfort of their homes. This should benefit DStv.

Is cost an issue and is your hire purchase scheme on the dishes a major barrier to entry?
Due to the relatively lower per capita incomes in Uganda and the rest of the continent, the initial cost of acquiring the equipment has been a big barrier to accessing DStv.

However, last year, we had some good offers in which we absorbed a large portion of equipment cost to increase accessibility.

This has substantially contributed to the growth seen in the past 18 months. However, lowering the cost of equipment alone will not ensure you are able to build a sustainable pay TV business.

Over the past few years, we have added a number of new channels to all bouquets at no extra cost.

We have also increased the quantum of African content and the two Africa Magic channels have had an excellent impact on our ability to attract and retain subscribers. We have also signed deals with a number of local African leagues to screen their matches on the SuperSport channels.

These have been very popular with local audiences in those countries and other African countries.

And, as mentioned earlier, the reality shows, which are exclusive to M-Net channels on DStv, have been a hit with audiences across Africa.

So, the content on your bouquets and the variety determine whether you have a sustainable business or not.

Having been in pay TV business for the last 10 years, what is the future of your business in Uganda and Africa in general?
Our business in Uganda is very strong and we

increase our subscriber base every year. The major challenge we face is that the subscriber base tends to be very unstable and event-driven.

We have to contend with this, but we are happy with the progress our management team has made in this market. We shall continue to expand our operations to far flung corners of the country to ensure all Ugandans access our product.

On the continent, we are happy with the growth of our business and the entry of competition is probably testament to our success in what is believed to be a difficult environment to do business. The opening up and democratisation of a number of countries is helping attract foreign direct investments into the continent and we hope that with this wave of progress, we can grow further.

Pay TV penetration is still low. But as long as there is political stability, economies in Africa will continue to grow as multi-national companies look for new untapped environments to do business.

That is good for our business.

Lately, there is a price war between you and GTV. Is it sustainable?
We make our strategic decisions basing on sound business considerations, not emotions.

The price reductions on equipment have been good for our business and are responsible for the growth in subscriber base in Uganda and other parts of Africa.

However, this has been done as part of a broader strategy to ensure that we do not only attract new subscribers, but we keep them.

Ultimately, it will be a combination of the low cost on equipment and other factors that will ensure you have a sustainable business.

How big is your subscriber base in Africa?
By March 2008, our subscriber base in sub-Saharan Africa was 694,000. If you add South Africa, it is 2.5 million.

You lost exclusive rights to screening of the Premiership matches to GTV. Hasn’t that put a dent on your business?
We still show 20% of all the English Premier League (EPL) matches exclusively. Some big matches involving the top four teams were shown exclusively on DStv last year and similarly this year, there will also be some games exclusive to DStv.

We also have matches from some competitive European leagues and from African competitions as well.

However, to answer your question, no, the loss of exclusivity to 80% of the EPL has not negatively affected our business.

In fact, we have been growing our subscriber base substantially since we lost a large portion of the EPL. The reason is that whilst the ability to offer the EPL makes it easier to sell your bouquet, particularly in a soccer-driven market like Uganda, retention of subscribers can only be achieved through variety. People want to watch something else apart from football. You can’t model a sustainable business around the EPL without enough variety.

What should your Ugandan customers anticipate?
Uganda is an important market and we shall continue striving to offer value to the Ugandan DStv subscriber. We shall continue to add more channels to our bouquets to ensure we remain ahead of the competition in offering the choice and variety of programming they deserve.

There are a lot of talented people in Uganda and as we continue to increase African content, Ugandans can expect more movies from Uganda to be screened on DStv. Some of our reality shows will be hosted by Uganda.

We shall continue being leaders in introducing cutting edge TV technology in Africa. The High Definition (HD) PVR will be launched in Uganda soon. We are in the process of doing feasibility studies for introduction of mobile TV.

This should launch in Uganda in the near future if regulatory approval is granted.

Also, an exciting viewer competition that will offer great prizes will be launched soon.

Pay TV business still growing, says DStv chief

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