Netflix and DStv are not competing against each other in South Africa: Icasa

There is a big difference between streaming services such as Netflix and other services being offered by traditional broadcasters in South Africa – such as DStv.

Speaking to CNBC Africa, Botlenyana Mokhele a councillor at Icasa, said that the regulator’s findings show that the two services are not in the same market.

“Things could change in the next three years but currently they are not in the same market. They don’t offer the same service and the impact they have is limited,” she said.

“We are currently studying their impact so that when we do the next review we will be able to determine as to whether to act.”

This means that Icasa currently has no plans to regulate these streaming services in South Africa in the immediate future, she said.

Advantages

Mokhele said that Multichoice has a number of advantages over streaming services.

“Multichoice has live programming, it has sports, news and local content. Whereas these (streaming services) are more like video-on-demand – they only have series and movies,” she said

“You need to compare pears with pears when it comes to such matters. If streaming service can acquire sports rights then the game changes, but at the moment they serve different segments of the market.”

Mokhele said that Icasa’s studies showed that the two services are actually complementary to one another – as highlighted by the fact that Multichoice has its own streaming service in the form of Showmax.

Dominance

In its findings document published on 12 April, Icasa said that it was concerned that Multichoice may use its dominant position in South Africa to limit competition in the streaming market.

This was specifically worrying when looking at Multichoice’s streaming services (DStv Now and Showmax) compared to competitors like Netflix, it said.

“Multichoice states that Netflix subscribers are only two-thirds of its Showmax subscribers, indicating that Multichoice is currently leading in terms of subscriber numbers in this market,” Icasa said.

“There are concerns that Multichoice may use its dominant market position in subscription television services to limit competition in the video-on-demand market.”

According to Icasa, Multichoice submitted that the entry of over-the-top players, particularly Netflix, posed a significant competitive threat to its operations in South Africa. However, the authority said that the group’s business plans – heavily redacted in the report – contradicted this.

“Taken overall, Multichoice appears to engage in what could be considered a ‘threat inflation’ tactic that is not underpinned by any hard evidence in the South African market, beyond anecdote. It cites data from other countries and transposes the market dynamics to the South African context.

“In the authority’s view, data shows that Multichoice is firmly in control of the market and will continue to do so for the foreseeable future, despite the entry of OTTs in South Africa.”


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Netflix and DStv are not competing against each other in South Africa: Icasa