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DStv’s big price hike problem

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MultiChoice continues to hike DStv prices annually even as it bleeds its most valuable subscribers, despite the growing competition from more affordable video streaming services.

The satellite TV broadcaster dominated the home entertainment industry in South Africa for decades, with no real rivals to its wide range of international and local content.

Its de facto monopoly over video entertainment and premium sports broadcasting allowed it to increase prices yearly, with little to no threat of customers leaving.

Rival services like eMedia’s Openview and Starsat (formerly Top TV) only launched many years after DStv, putting them on the backfoot from the outset.

While Openview enjoys relative success, its subscription-free model means eMedia does not have the funding to invest in the range or depth of content as DStv.

Despite its advantage, DStv has been bleeding subscribers on its top-end Premium package for several years.

In its 2021/2022 financial year, it also saw a reduction in its mid-tier customer base on the Compact, Family, and Extra packages.

The increase in low-end subscribers on its Access and EasyView packages has not been enough to compensate for its losses in the premium and mid-tier segments.

MultiChoice has been forced to hike prices to try and maintain a healthy average revenue per user (ARPU) and ensure continued profitability.

Most recently, it implemented increases of between 1.2% and 4.9%, depending on the package.

The most significant increases were for its Compact, Family, and Access packages, which all increased by more than 4%.

The chart below shows how the DStv Premium price increased between 2000 and 2022 relative to South Africa’s official inflation rate.

DStv increased Premium prices above or close to the inflation rate until around 2017.  After that, year-on-year hikes for the top-end offering were much lower.

That reduction came after DStv started to see a decline in Premium subscribers, suggesting its price had reached the upper bounds of middle-class affordability.

Our recent analysis of the channels DStv has cut from Premium in the last three years showed that it now offers less value than it did in 2019, despite costing more.

To justify big increases, DStv needs to add value.

That is becoming increasingly hard to do with powerful global streaming services like Netflix, Disney+, Amazon Prime Video, BritBox, and Apple TV+ staking their claim in South Africa.

While DStv does have broadcasting rights to popular international content licenced from HBO, this is also available on MultiChoice’s streaming service Showmax for less than an eighth of the price of DStv Premium.

For the same R839 per month for Premium, you could take up a combination of eight other video streaming services.

If you opted for the special Disney+ South Africa launch promotion, you could get a full year of service for around the same price as one month of DStv Premium.

Furthermore, the prices of mobile data and home fibre packages have reduced radically in recent years, allowing more households to take up streaming services and cut the proverbial cord.

The chart below shows the enormous discrepancy between the prices of several popular video streaming services and DStv Premium.

Late last year, Netflix hiked the prices of its Standard and Premium subscriptions by 14% and 18%, respectively.

While this might seem exorbitant, it should be noted that this was Netflix’s first price increase since entering South Africa in 2016.

Contrary to the backlash over small increases for DStv Premium, many South Africans said the price changes made sense given the value they got with a Netflix subscription.

MultiChoice seems aware it cannot compete against global heavyweights, and has increasingly shifted its focus to local content.

While that has helped it win lower-income households, the broadcaster struggles to attract customers with greater buying power.

One play remains

The final hill upon which DStv Premium seems to be making its stand is SuperSport.

MultiChoice invests heavily in acquiring the exclusive rights to broadcast various big-ticket tournaments and events in South Africa.

These include numerous rugby, cricket, tennis, motorsport, and golf matches and games.

Although there are several specialist sports streaming services like F1TV, ATP Tennis, and DAZN, many major tournaments are still exclusively available in South Africa through SuperSport.

But global streaming services are increasingly looking toward international sports as potential new sources of advertising revenue.

One example is the recent battle for the rights to stream the highly-popular Indian Premier League (IPL) from 2025, which drew multi-billion-dollar bids from Paramount, Amazon, and Walt Disney.

In the US, Apple TV+ has already acquired the rights to stream certain American baseball and football games.

The ANC has also tabled a renewed proposal that seeks to ban the sale of exclusive live broadcasting rights for sports events of national importance.

Losing the rights to exclusively show Springboks, Proteas, and Bafana Bafana matches would be a devastating blow to DStv Premium.

MyBroadband asked MultiChoice about its plans to keep DStv Premium attractive in light of increased competition from international streaming services.

The broadcaster said it provided the “best local and international video entertainment offering” and provided further value with bundled services, dedicated content, rewards and savings.

Regarding the price increases, MultiChoice said it evaluated market conditions annually to make data-backed decisions.


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