DSTV Monopoly No More: Shifting Landscape of Pay TV in South Africa
Discussing the evolution of DSTV's business model, declining subscriber base due to online streaming, the arrival of competitors like Netflix, and changing trends in the South African Pay TV market. Analysis includes the impact on customers' needs, pricing strategies, and content offerings.
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Presentation Transcript
DSTV MONOPOLY NO MORE UCT GSB CONSULTING
COMPANY CHOICE DSTV DSTV - - MULTICHOICE MULTICHOICE WHAT WHAT HOW HOW Movies Movies Local content Local content Sports Sports Kids Kids New & Life stile New & Life stile Documentaries Documentaries Deliver video content over satellite Push Content They decide WHAT They decide WHEN The ONLY South African Pay TV operator with operations in Africa Over 25 Years Also Own MWEB Local ISP Broadband Provider
DSTVS BUSINESS MODEL Subscription based Subscription based Setup installation Setup installation After 25 years After 25 years ~5 million subscriber ~5 million subscriber based based Pay to access Pay to access bouquet of channels bouquet of channels 3 payment options 3 payment options Base Package Base Package $300 30 Sport Package Sport Package $480 Only sport Premium Package Premium Package $840 500 $10 000 $10 000 Average Salary of Average Salary of working Class in SA working Class in SA Price per year Channels
SITUATION ANALYSIS Declining subscriber base moving to online SA Monopoly Pay TV Operator Over 25 years Strong focus on Hollywood and Local Content Pay TV Landscape disrupted by Online ~5 Million Subscribers ARPU ~$780 Owning Sporting Rights
TIMELINE OF EVENTS 2013 - 20142013 - 2014 2013 - 2016 Now Users start accessing video content online illegally Broadband penetration & speed picks up DSTV Subscriber base continues to decline 2016 Netflix Arrives in SA Subscriber base starts to decline DSTV Launch their Netflix Alternative SHOWMAX respond with PVR & Box Office
ANALYSIS NICCOLO
CHANGING TRENDS What are the South African Pay TV Customer Needs? What are the South African Pay TV Customer Needs? Needs Needs Access to variety Whatever, whenever Affordable Flexible pricing Latest Content Local Content Sporting DSTV DSTV- - Multichoice Multichoice SA low-middle income cash strapped working class DSTV had a monopoly in the market and customers had no choice DSTV did not adapt to changing customer trends DSTV did not adapt to changing customer trends
FACTORS OF DISRUPTION 2014 2014 Effects Effects DSTV RESPONSE DSTV RESPONSE Internet penetration Internet penetration increase to 52% increase to 52% Launched Box Office Launched Box Office pay for latest movie $2.5 One day only Launched PVR Launched PVR Record Shows Watch anytime Launch Launch Showmax Showmax Replica of Netflix Subscription based model $10 On demand DTSV start losing DTSV start losing customers 2014 customers 2014 Broadband speed Broadband speed increased to 8bits/s increased to 8bits/s speed enabled speed enabled video streaming video streaming 2016 2016 DSTV first ever DSTV first ever staff restructure churn staff restructure churn starting to hurt starting to hurt Customers demand Customers demand flexibility & on demand flexibility & on demand DSTV did not change pricing or enable their content online DSTV did not change pricing or enable their content online
THE DISRUPTOR ENTERS Netflix entered in 2016 Netflix entered in 2016 DSTV DSTV- - Multichoice Multichoice Needs Needs Access to variety Whatever, whenever Affordable Flexible pricing Latest Content Local Content Sporting Netflix Netflix Netflix Netflix provided provided service that service that met SA met SA customer customer needs needs DSTV did not take threat seriously and did not adapt DSTV did not take threat seriously and did not adapt
NETFLIX VS DSTV NETFLIX DSTV SA Consumer Annual cost of $120 No Setup Fees Flexible Viewing Excludes Broadband - $250 per Year Annual cost of $840 $300 Setup Fees Annual escalation Semi- Flexible Viewing Price sensitive Low Disposable income Netflix is seen as viable replacement Affordable Affordable Sports & Local Content Sports & Local Content DSTV s only competitive advantage is local and sporting DSTV s only competitive advantage is local and sporting
RESPONSE & CRITIQUE OF DSTV Period Period DSTV Response DSTV Response DSTV Rational DSTV Rational Critique Critique To give access to longtail content on a flexible basis Maximum of 6 movies which were out dated. Affordability 2013 Launch Box Office Affordability Limited to disc space Limited to specific TV channels Launch PVR (Personalized video recording) Allowed flexibility through recording shows 2014 Poor user experience Platform compatibility Quality of viewing poor Poor content Needs not met and poor adoption Replica of Netflix with Local content @R99 / month 2015 Launch Showmax Too late (1 year after Netflix) Value not as good as Netflix (content) Brought local content to it Showmax become free for premium subscribers 2017 Stop attrition of subscribers
RESPONSE & CRITIQUE OF DSTV Period Period DSTV Response DSTV Response DSTV Rational DSTV Rational Critique Critique To give access to longtail content on a flexible basis Maximum of 6 movies which were out dated. Affordability 2013 Launch Box Office Affordability Limited to disc space Limited to specific TV channels Launch PVR (Personalized video recording) Allowed flexibility through recording shows 2014 Poor user experience Platform compatibility Quality of viewing poor Poor content Needs not met and poor adoption Replica of Netflix with Local content @R99 / month 2015 Launch Showmax Too late (1 year after Netflix) Value not as good as Netflix (content) Brought local content to it Showmax become free for premium subscribers 2017 Stop attrition of subscribers Ignored customer needs and failed to adapt from a complacent perch of sport Ignored customer needs and failed to adapt from a complacent perch of sport
WHAT DSTV SHOULD HAVE DONE DIFFERENTLY Recommendation Recommendation What What Why Why DSTV + Broadband bundle (m-web part of DSTV) Add value to premium Entrench & Retain customers Immediately creates channel to deliver wider selection of content Embraced technology early Embraced technology early Risk of losing non sport watchers Allow flexible packages, meeting needs & costs Compromise or be Cannibalized Review the pricing Review the pricing Launched PVR box online DSTV for local content Showmax for international Bring Netflix (& other) onto PVR for revenue share Not as a competitor but rather as complimentary Sky & BBC in UK retained and grown Take all content online Take all content online (2014 / 2015) (2014 / 2015) access to internet internet access to
SUMMARY OF OUTCOMES Advances in technology & global trends Changing customer needs Failed to capture opportunity Our DSTV monopoly Netflix Disruption Recommendations Recommendation Recommendation Embraced technology early Outcome Outcome Retain customers Retain customers Competitive pricing Fragmented but future Fragmented but future proof clients proof clients Take all content online (2014 / 2015) access to internet Access & flexibility Access & flexibility internally when needed internally when needed
