Video entertainment firm MultiChoice has witnessed growth on its online platforms.
This emerged when the company today announced its financial results for the year ended 31 March (FY23).
According to the firm, the number of users of the group’s DStv app and Showmax services continues to grow, as online consumption increases, supported by rising broadband connectivity and more affordable pricing.
The group’s overall online user base increased by 12% year-on-year (YOY), with the growth rate for paying Showmax subscribers at a "strong" 26%.
Showmax Pro, which includes live sport, enjoyed strong growth and doubled its subscriber base in FY23.
In a statement, the video entertainment group says MultiChoice’s partnership with Comcast (owner of NBCUniversal, Sky and Peacock), announced in March, represents a significant step-up for the group’s future over-the-top ambitions.
“The new Showmax business will bring the world’s best local and international content to Africa and will be supported by Peacock’s scalable and feature-rich technology platform,” says MultiChoice.
The transaction successfully closed on 4 April, with MultiChoice Group now owning 70% of the new Showmax group, and NBCUniversal owning the remaining 30%.
New products and launch dates will be announced in due course, with the platform expected to go live in the second half of FY24.
On the product front, the group launched the DStv Streama, a device which allows for the streaming of DStv and other partner applications through a normal television in a connected environment.
To further expand its aggregation strategy, the group says it added Disney+ to its portfolio of products available for customers to add to their bill, while Universal+ increased the overall content offering available to premium subscribers.
During the year, the group also announced its partnership with Sky UK, to bring its Glass products and services to local customers in the coming years.
The firm reveals the South African consumer-facing business environment faced severe challenges during FY23.
“At a time when consumers were already battling with interest rate hikes, elevated inflation and high levels of unemployment, load-shedding moved from being intermittent to becoming a permanent fixture in customers’ lives.”
It notes that load-shedding has had a negative impact on the South African pay-TV subscriber base and activity levels, with a noticeable increase in churn when load-shedding reaches stage four and above, even when consumers have disposable income.
It explains this is evidenced by the disconnect between the 290 000 growth in 90-day subscribers (that shows customers still value the group’s products) and the 140 000 decline in the active subscriber base at the end of March (customers are more selective when they sign up to avoid periods of excessive load-shedding).
Revenue of R35 billion was down 2% YOY in South Africa, affected by a 3% decline in subscription revenue, partially offset by a R200 000 million increase in other revenue, mainly due to growth in insurance premiums, as well as a positive contribution from growth in DStv Internet customers. Trading profit of R8.5 billion resulted in a trading margin of 24.2%, within the 23% to 28% guided range.
“We continued to scale our overall subscriber base and benefited from a strong performance in the rest of Africa, that delivered a trading profit for the first time since our listing in 2019. It is a remarkable performance by the team, considering they have had to absorb almost R3 billion in currency losses in the last four years,” says CEO Calvo Mawela.
“We increased the breadth and depth of services offered to our customers and continued to grow our entertainment ecosystem, most notably through our recent streaming partnership with Comcast,” he adds.
The group added 1.7 million 90-day active subscribers, representing 8% YOY growth, to close the year on 23.5 million subscribers.
The 90-day subscriber base comprised 14.2 million households (60%) in the rest of Africa and 9.3 million households (40%) in South Africa.
Chip shortages persist
Meanwhile, MultiChoice points out that customers serviced by the group’s technology segment, Irdeto, faced ongoing shortages in silicon supply and disruptions in global supply chains.
It adds the war in Ukraine also led to a group decision to exit the Russian market, which had a moderate impact on both revenue and margins.
Combined with production disruptions and lower consumer demand in markets like India and China, Irdeto’s consolidated revenues were down 4% YOY (-17% organic) to R1.5 billion.
Despite top line pressure, it notes the segment contributed R600 million to group trading profit, with margins strong at 41% due to efficient cost containment, a favourable portfolio mix and an uplift from the currency conversion rate.