MultiChoice recently published its interim financial results for the period ended 30 September 2020, showing good performance but a big drop in DStv Premium subscribers.
The group added 2.1 million 90-day active subscribers across all regions compared to the same period last year, reaching 8.7 million households in South Africa.
This subscriber growth was attributed to the adoption of its cheaper DStv packages, however, as the company lost a significant number of DStv Premium subscribers due to the pandemic and lack of sport.
“The impact of COVID-19 and the associated lockdown saw consumers prioritise video services, but a lack of live sport and the inability of commercial subscribers to trade negatively impacted revenue generation,” MultiChoice said.
“The ongoing shift in subscriber mix towards the mass market, combined with the impact on Premium and commercial subscribers as mentioned, resulted in the monthly average revenue per user (ARPU) declining 5% from R292 to R278,” the company said.
While it has been a tough year for live sport, which convinced many DStv Premium subscribers to drop their packages, the overall decline in Premium subscribers is not a new trend.
Bleeding DStv Premium users
The number of DStv Premium subscribers has been declining ever since Netflix launched its streaming service globally in 2016.
The first indications of Netflix’s effect on MultiChoice’s DStv Premium offering came from Naspers financial statements in 2016, which showed that there was a dramatic slowdown in new DStv Premium sign-ups.
By 2018, Naspers reported that it was losing DStv Premium subscribers and had been doing so since its 2015/2016 financial year.
It is important to note that DStv’s subscriber base continued to grow despite this, as many subscribers downgraded their packages from Premium and its mid-market and entry-level packages gained traction.
After continuing to reflect a decline in Premium subscribers for years, however, Naspers began to change the way it reported its DStv subscriber numbers.
The first change was when MultiChoice unbundled from Naspers. After this, it lumped both its declining Premium and stronger Compact Plus subscriber base into the same “Premium” subscriber category when reporting subscriber numbers.
As a result of this change, MultiChoice began reporting subscriber growth across all its operations in Africa for its premium segment.
In other words, DStv Compact Plus was growing enough in the rest of Africa to offset those DStv Premium subscribers cancelling their packages.
However, this did not remain stable for long, and MultiChoice made another change to the way it reports subscribers in 2020.
It switched from reporting the number of subscribers that are active on the day of reporting to the number that has been active over the past 90 days.
This obviously results in a higher number, although when compared to the previous year’s 90-day subscriber base, the same downward trend can be discerned in South African operations.
DStv Premium subscribers graph
The number of changes MultiChoice has made to its subscriber reporting can be confusing, but there is another useful way of measuring the subscriber mix for MultiChoice – average revenue per user (ARPU).
The more lower-end DStv customers and the fewer Premium subscribers MultiChoice has, the lower its ARPU figure will be.
ARPU will also decline as more subscribers are signed up which bring in revenue below its current value, regardless of the number of Premium subscribers.
The graph below includes MultiChoice’s Premium subscriber numbers according to all three definitions so far, as well as the historical ARPU trend.
All of this data points to an overall decline in Premium subscribers, which is occasionally obscured by an increase in Compact Plus subscribers.
View this information in the graph below.