MultiChoice Group Ltd signed deals with Netflix Inc and Amazon.com Inc to offer their streaming services through its new decoder, a move intended to help Africa’s largest pay-TV company retain subscribers.
MultiChoice, spun out of Naspers Ltd in February of last year, has been battling greater competition from its US rivals after cheaper and faster internet speeds enabled them to grab a foothold on the continent. The Johannesburg-based company introduced its own streaming product, called Showmax, in 2015 and has offered cheaper deals on premium packages to shore up its customer base.
Details on how the move could affect MultiChoice’s monthly fee will be announced in the coming weeks, a spokesman said on Wednesday.
“What would typically happen is we would get commission on whatever revenue gets generated by customers coming from our platform,” chief financial officer Tim Jacobs said in a phone interview, without being specific about Netflix and Amazon. The deals were included in MultiChoice’s results presentation, published on its website, under the heading ‘Improve Retention’.
The shares jumped on the news, gaining 8.5% to 102.62 rand at the close in Johannesburg, the highest in almost four months.
MultiChoice said subscriber numbers rose by 5% in the year through March to 19.5 million households, with demand picking up at the end of that period as South Africa, its biggest market, entered a coronavirus lockdown.
The company offers a wide variety of international sport to its highest paying viewers, but has also been focusing more on local content. “Trackers”, a show about organized crime including diamond smuggling set in Cape Town, was MultiChoice’s most-viewed show in the 2020 fiscal year, beating the final season of international hit “Game of Thrones”, the company said.
Netflix has also made an effort to produce more African content. Dramas “Queen Sono” and “Blood and Water”, both South African, debuted on the service this year, supported by extensive marketing campaigns.
“There is little overlap between content on Showmax, that is now 50% local, and a service like Netflix at the moment, hence we find deals with other video-on-demand services complementary,” said Jacobs.
Deals between pay-TV providers and streaming services have been struck elsewhere. Sky UK and France’s Canal+ both have agreements with Netflix.
MultiChoice reported full-year earnings per share of 1.17 rand, compared with a loss the previous year. The company announced a maiden final dividend of R5.65 a share.
The full impact of the Covid-19 pandemic on the business is as yet unknown, MultiChoice said, adding that it expects weaker economic growth and higher unemployment in many of its markets. The TV provider continues to film local productions, taking specific precautions such as splitting production teams, Jacobs said.