MultiChoice reveals grim price of piracy

• DStv operator says 2-million pirated views amount to loss of billions

MultiChoice has estimated that more than 2-million people view pirated versions of the series and movies available on its platform, haemorrhaging billions of rand in annual sales and shining a harsh spotlight on pervasive copyright violations.

MultiChoice disclosed this to the Independent Communications Authority of SA (Icasa), as the owner of DStv bleeds subscribers due to a confluence of factors, including the popularity of subscription video-ondemand over-the-top (OTT) streaming services like Netflix, which are stealing market share from the group.

The extent of the piracy is detailed in a supplementary discussion document from an inquiry into subscription television broadcasting services in SA.

The Sport Rights Owner Coalition urged the regulator to consider the effects of piracy in the industry, pointing out that the UK had developed a framework to pre-empt piracy before it happened.

“This view is supported by MultiChoice, which estimates that more than 2-million people view pirated versions of the series and movies available on DStv in SA, pointing to its pervasiveness. According to MultiChoice, piracy is a competitive constraint on subscription television

PIRACY HEADACHE COMES AS MULTICHOICE GRAPPLES WITH A LOSS OF SUBSCRIBERS, PARTICULARLY IN SA

services in SA,” the supplementary discussion document reads.

“The authority recognises that piracy is a pervasive problem for content creators and broadcasters alike,” MultiChoice said. “The authority considered the advent of piracy and whether it constrains subscription broadcasting in SA, as claimed by MultiChoice. It has been reported that with pirated live sports content, high-income viewers who can afford subscription services are less likely to engage in piracy.

“The authority still recognises that piracy may have a significant impact on MultiChoice and any other paid service. However, because of its pervasive nature, it is difficult to ascertain with certainty the precise nature of the impact that it has as a competitive constraint.”

The piracy is a revenue drain on MultiChoice. If, for example, the pirates were accessing the premium bouquet signal, this would amount to more than R1bn a month in lost revenue.

In November, MultiChoice, in conjunction with the police, undertook two anti-piracy operations in Gauteng, with several individuals arrested who were involved in the illegal distribution of streaming devices preloaded with unauthorised applications for accessing DStv and other premium content.

The piracy headache comes as MultiChoice grapples with a loss of subscribers, particularly in SA, at an alarming rate. Africa’s biggest pay-TV operator has gone from 23-million subscribers to 19.3-million in less than two years. According to the company’s latest results, subscriber numbers — measured on

a 90-day active basis — fell 11% (or 1.8-million) to 19.3-million, from 21.7-million in the previous comparable period. In SA, it has lost 400,000 customers from a year ago, with the biggest drop being in premium subscribers.

South Africans spend more than four hours a day watching TV. That’s the second highest in the world, behind only the US, according to a 2024 study by Electronics Hub.

The Icasa discussion document says OTTs have had a fundamental effect on MultiChoice’s business, influencing its pricing behaviour. According to Icasa, OTTs have managed to rapidly grow from about 3.7-million in 2017 to having more than 8.3million subscribers in 2024 in SA, saying MultiChoice had been losing a significant number of subscribers, with a large number of those lost subscribers switching to OTT services.

“Intuitively it appears that those subscribers who cancel their MultiChoice subscriptions for whatever reason end up choosing OTTs based on the growth of OTTs in recent years. Therefore, the authority is of the view that premium-tier subscription television is substitutable with SVOD [subscription video on demand] offered by OTTs,” the document reads.

“Further evidence that MultiChoice may be experiencing greater competitive constraints from OTT services could be observed in its pricing behaviour. In 2021 MultiChoice increased its DStv Premium bouquet by only 1.21% (well below inflation) despite having the most comprehensive content portfolio,” Icasa said.

“The authority is of the view that one of the most significant factors, including other macroeconomic factors, contributing to the lower price increases could be the loss of subscribers to alternative platforms.”

SOUTH AFRICANS SPEND MORE THAN FOUR HOURS A DAY WATCHING TV, THE SECOND HIGHEST IN THE WORLD

US giant Netflix told Business Day in December that it had spent R4bn on SA content since 2021.

MultiChoice is also working at becoming a one-stop shop for streaming, having signed deals with HBO, Paramount and NBC, which now use Showmax as a portal to offer their streaming content in Africa.

In addition to Showmax, the group has an online version of its broadcast service called DStv Stream, which saw a 71% yearon-year revenue increase for the half year to September 2024, and the release of numerous platform improvements.