Netflix has an unfair advantage over DStv: Multichoice CEO

Multichoice South Africa CEO Calvo Mawela says that Netflix currently has an unfair advantage to capture the online market in South Africa.

In an interview on SABC News, Mawela said that pay TV is under pressure in terms of its survival – “viewer habits are changing, people are moving online,” he said.

“As a business you need to respond to the viewing habits of the consumers, and also move online.”

He highlighted the launch of Showmax, and DStv Now as examples of the company reacting to those changing habits. “As a business we are going to move online…and you need to build that platform.

He pointed to a big decline in the number of premium subscribers, “which is putting pressure on our revenue going forward”. He said that the business would hope to make that up by capturing a growing online market”.

Parent company Naspers noted last week that it added just under 500,000 DStv subscribers locally over the past year, approaching a base of nearly seven million households.

It added that the average revenue per user (ARPU) remained relatively stable at R344 (compared to R353 in 2017), despite an ongoing change in subscriber mix.

Mawela said that DStv had lost more than 100,000 premium subscribers over the past year. In terms of revenue, he called this number ‘significant’.

He said of the competing online platforms: “I am not afraid of competition. It puts pressure on us to do better and service the customers better.” He did however, bemoan the fact that international platforms like Netflix are unregulated in the country. “They do not pay a cent in this country for tax. They do not pay income tax.”

He also added that Netflix did not employ people locally. “That, we think, is an unfair advantage,” the chief executive said.

The added that while regulatory body, the Independent Communications Authority of South Africa, has called on pay TV players to share their content with third party platforms, Netflix, which spends $8 billion annually on developing its own content, is not asked to do the same.

“That gives them a nice advantage to capture the audience,” Mawela said. “You are strangling us more and more, while you are giving them free rein.”

He went further by saying that this would not be sustainable for all the jobs that Multichoice has created and could even “destroy the broadcasting industry as we know it”.

Mawela called on Icasa to level the playing field in terms of regulations.

DStv has been accused of being a monopoly; however, Mawela defended the group’s products. “We are giving entertainment for the whole family,” he said.

When asked why subscribers cannot pay for the channels they want, he said: “The model doesn’t work.”

Mawela cited Canada as an example of a country that changed its regulations around pay TV to enforce an la carte model. “Guess what? Today there is no uptake because consumers end up paying more for the same number of channels that they’re getting today.”

He said that through its current model,”we attract a much larger audience and then prices come down”.

“That’s how we do our packaging in order to ensure that we keep prices down, that will attract a bigger audience because we’ve got children, we’ve got sport, you’ve got movies and all other content that we have.”

Watch the full interview:

Read: Here’s how much money Multichoice makes from each DStv subscriber

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Netflix has an unfair advantage over DStv: Multichoice CEO