Friday, June 18, 2021

MultiChoice: Monopoly or Victim of Market Forces?

MultiChoice started as the subscriber management arm of M-Net, the analogue Pay-TV channel. From these humble beginning, it rose to become the leading multichannel digital satellite television operator across the African continent. This past Thursday, Sunday Standard met MultiChoice Country Manager, Billy Sekgororoane at the company’s headquarters in Riverwalk Mall. He set off by stating that before hiking subscription fees, the company considered many factors like impact on subscribers, current inflation as well as efficiencies effected within the company.
The weak Pula and exchange rate factor
Apart from general operational costs, Sekgororoane attributed MultiChoice’s rising subscription fees to fluctuations in the USD/BWP exchange rate. Though the company charges local customers BWP, most of its basic operational costs, including satellite and channels costs are paid for in USD.
“Mind you, we make price adjustments only once in year despite fluctuation of the local currency against the US Dollar throughout the year. Even after our latest announcement, already the Pula has started performing badly against the Dollar, but we will not be revising prices until next year April,” he said.

Daily exchange rates figures published by the Reserve Bank show that the Pula continued on a downfall against the US Dollar, breaking the P10 per dollar barrier on Wednesday. The Pula has lost 5.3 percent to the dollar for the year thus far. Purchasing power parity theory advocates for a relationship between exchange rates and inflation; such that a country with high inflation should expect its currency to depreciate against the currency of a country with lower inflation.

Premium content is expensive

MultiChoice provides its Dstv services to different market segments, from entry level to premium. Its premium service provides more than 90 video + 4 HD video, 40 CD quality audio channels, 32 radio stations and three interactive services. Dstv is also available as a niche service for the Indian and Portuguese communities. According to BBC Sports, Sky & BT will pay ┬ú5.136 billion for live Premier League TV, representing a 70 percent increase on the current ┬ú3 billion deal, which ends in the next season. MultiChoice classifies the EPL as ‘premium’ content.

“Premium content such as the EPL doesn’t come cheap,” says Sekgororoane as he flips through his presentation slides.

MultiChoice are strong market leaders and they remain the preferred service provider despite their seemingly exorbitant prices. After the latest hike, customers suggested that MultiChoice should unbundle its offering. Unbundling would allow subscribers to choose channels a la carte rather than having to purchase a slew of channels they never watch.

“From a system and administrative point of view it’s nearly impossible. It wouldn’t make financial sense. The consumer may end up paying more for fewer channels,” responds Sekgororoane.

He is quick to remind customers that the pay TV business around the world is driven not just by content but, at the top end, by the quality of such content; and that doesn’t come cheap.

“Our pricing reflects the cost of doing business and the necessary return on capital in order to ensure a world class, reliable and sustainable pay television service. Any attempt to change the current model would possibly result in a downgrade in our product”.

Inflationary link to price hikes

After the latest increase, Dstv subscribers will part with P610 per month. Though they are somewhat used to MultiChoice’s annual price hikes, subscribers were especially incensed by this year’s increments and they described the company as a monopoly that preys on its clients. However, on Thursday Sekgororoane explained that increases are linked to inflation and they don’t only affect Botswana, but every country where MultiChoice has operations. Under the revised Dstv prices, the premium bouquet will now cost P610 while the second best Compact Plus goes up from P380 to P420 per month. Customers have also complained that local Dstv offers limited content than their South African counterparts. But Sekgoroane differs, saying the only content that MultiChoice Botswana is not able to broadcast is the SABC channels, whose broadcast rights are not cleared.

“It’s a misconception that paying Dstv on the South African side is cheaper. In fact, it’s illegal to give false addresses when purchasing those decoders from the other side. The practice is also enriching the South African government through VAT which could be paid to our government if people subscribed in Botswana,” he said.

RELATED STORIES

Read this week's paper