MultiChoice Group has signed deals with Netflix and Amazon. This deal will give MultiChoice subscribers access to Netflix and Amazon Prime Video content.
The Group revealed its agreement with the duo in its financial results for year-end March 31, 2020. The statement read, "Signed deals with Netflix and Amazon to integrate service onto the new decoder".
The new decoder that will offer the service is the next-generation of DStv Explora. It would have 4K resolution capability and internet connectivity.
But it is unclear how the new service will affect DStv monthly subscription fee.
Multichoice is the largest pay-TV company in Africa. It operates the most-viewed premium and mass pay-television providers, DStv and GOtv.
Earlier this month, MultiChoice revised its pricing in Nigeria to reflect the new 7.5% value-added tax. As a result, DStv premium fee increased from ₦15,800 to ₦16,200. GOtv Max price also increased to ₦3,280.
"We have signed distribution agreements with two major international subscription video-on-demand services", MultiChoice CFO Tim Jacobs said. "Unfortunately, we are in a pre-release embargo period with both international players. We can't talk about the specifics until the formal consumer formal release".
According to the results, MultiChoice has added 900,000 subscribers, increasing its subscriber base to 19.5m. Out of whom, 57% (or 11.1m) are from other parts of Africa, and only 43 (or 8.4m) are in South Africa.
Meanwhile, Prime Video and Netflix are the world's largest over-the-top (OTT) video-on-demand (VOD) services. They have 130m and 183m subscribers, respectively.
By partnering with Netflix and Prime Video, MultiChoice is signalling a shift in its strategy. Because two years ago, CEO of MultiChoice Group, Calvo Mawela, was critical of Netflix and other OTT services in Africa. Because, at the time, MultiChoice had lost over 100,000 subscribers to OTT VOD services, he called for their regulation. Even though MultiChoice owns Showmax, which is also an OTT VOD service.
Presenting the financial results on Wednesday, however, Mawela had a different stance. "We need to make sure we become the platform of choice where people want to consume these services", he said. If we become the one-stop-shop where people can get all of these [OTT VOD services], we position ourselves very well to gain customers in the market".
MultiChoice Chief Financial Officer Jacobs also asserted the new position of the company. "We see all of them as complementary because there is limited overlap between our services", Jacobs said.
But according to a ViewScape Survey, about 20% of South Africans who sign up for services such as Netflix, Showmax or Amazon Prime Video do so intending to cancel their pay-TV subscription.
This deal between Africa's largest pay-TV company and Netflix will not be the first agreement the American production company has struck. It had previously announced partnership deals with Sky UK and France's Canal+ in 2018 and 2019, respectively.
Aside: Canal+ acquired Nigerian film production company, ROK Group, for an undisclosed amount.
Netflix has continued to make inroads in Africa with the production of local content. South African dramas "Queen Sono" and "Blood and Water" debuted on the Netflix this year. It also announced a formal arrival in Nigeria on February 25, 2020.
A series-adaptation of @LolaShoneyin'sThe Secret Lives of Baba Segi's Wives and a film-adaptation of Prof. Wole Soyinka’s Death And The King's Horseman! 🇳🇬— Netflix Naija (@NetflixNaija) June 12, 2020
Netflix strategy is to think globally by acting locally in terms of content and decision-making. Netflix believes the more international offices and studios it opens, the more international stories it can tell, the more international storytellers it can work with and the more international its service becomes. Upon its arrival in Africa, Netflix has succeeded in wooing local creators and audience.
The financial results of MultiChoice also show its first annual profit since it became a standalone company.
Last year, Naspers Limited had unbundled MCG to be a separate company listed on the Johannesburg Stock Exchange. According to Naspers, the unbundling of MCG completed its process of becoming a global consumer internet company with 100% of its revenue and profit coming from online [businesses].