MultiChoice Africa team address questions from journalists

MultiChoice Africa at a press conference on Wednesday 2 September 2015 addressed questions around the video entertainment service provider’s content, services and plans for the future, taking questions from media from across Africa at the ongoing content showcase..

The participants were Tim Jacobs, CEO of MultiChoice Africa; Wangi Mba-

Uzoukwa, M-Net Regional Director: West Africa; Theo Erasmus, M-Net

Regional Director: East and Southern Africa and Lusophone countries; and David Booth, Chief Content Officer, with the event facilitated by media consultant Jenkins Alumona.

Tim Jacobs, CEO of MultiChoice Africa on the video entertainment service provider’s pricing structures: We are constantly evaluating our cost structures. As part of our business model, we need to take into account the costs of content, relative to our different audience groups. There have been massive increases in the cost of content such asthe English Premier League football rights, which we have factor into our pricing. We’re conscious that a large part of the population is looking for a good set of quality content at the bottom end of the market, in the USD10 area, and we make decisions on the price points of our bouquet structure – it’s a continuous evaluation. We’re looking at alternatives too – there’s strong consumer behavior (especially in Nigeria) where many consumers are self-employed, and therefore, not monthly earners, so we’re looking at whether it’s viable to address a different type of model. However, it’s not something that’s on the immediate cards.

Tim Jacobs, CEO of MultiChoice Africa addressing a question about the EPL moving to the premium bouquet and its effects in the market in Botswana:

There are strategies we attempt that don’t always work out. We dropped the EPL to Compact Plus in the hope that we would get enough subscriber scale at a cheaper price point to help cover the cost of those rights. We never achieved the scale required to make that viable. We therefore made the decision that since we hadn’t managed to do so and we wanted to avoid a situation for our price-sensitive Compact Plus subscribers where they would have had to take a disproportionately high increase in bouquet pricing to continue to watch the EPL that we had to shift the EPL back to the Premium bouquet. In the latest round of rights negotiations, the EPL rights went up 70% and we needed to make tough decisions. It was a tough impact on consumers, but looking at consumer affordability, we felt it was better to offer them a sports package at a more affordable price point, so we had to re-balance things.

Different markets have different models for packaging sports. At MultiChoice Africa, we’ve adopted a bouquet packaging option. There are two ways to recover any type of cost – one is price, the other is scale. We tried the scale route first and found that at a Compact Plus level, we didn’t get the scale that we needed. We receive a lot of comments around the need for competition to our services – which is a double-edged sword.  From our side, we welcome competition – it makes us focus on our offering, content and customer service. On the other side, it drives the cost up. For example, in Nigeria in 2006, we lost the EPL rights. At the time, people applauded, but a year later, the people who won the rights went out of business because they couldn’t recover the costs. When the rights came back up for acquisition, it reset the benchmark and the EPL re-priced the rights for that part of the market - so the cost went up. At the time we didn’t increase the price of our subscription. When we re-signed the rights, we had to find a way to pass on the cost of that 70% increase to consumers – we didn’t like to, but we had to – it was a business decision.

Tim Jacobs, CEO of MultiChoice Africa on the accessibility of GOtv in all regions:  We look at each market on the basis of population size and the economics of rolling out a network. Our investment in GOtv is in excess of USD800 million, in 8 countries across the continent. To recover that money means we simply can’t roll out towers into every city where the population size and affordability aspect lends itself to Free-To-Air (FTA). Because we’re a Pay TV service, we can’t offer FTA service like governments do. In those areas, we’d typically pair up with an FTA operator, or the national broadcaster, which is a big part of our offering. We have a limit in terms of where our network reaches – we can generally cover 70-80% of a country. Areas that are remote need to be serviced through our satellite services because of factors including accessibility and terrain - the DTT signal needs to go across ground. Normally the national broadcaster or signal provider has the responsibility to ensure that FTA has national coverage, so they put towers in areas that it’s not economical for Pay TV providers to do.

Governments have a different issue to us when it comes to switching the analogue signal off –Governments have to worry about having network coverage for someone watching today in analogue – will the same person have access to the same programming on digital if they switch off the analogue signal?

Switching to DTT means viewers need decoders because most TV’s are analogue and the digital signal needs to be converted back into analogue in order for it to be viewed. Governments then need to make sure everyone gets access to decoders. So we ask national broadcasters to partner with us to use our network infrastructure and make a strong commitment to distributing decoders at subsidized prices in the areas our network is available. We want to help governments get over hurdles like signal, decoder distribution and accessibility.

David Booth, Chief Content Officer on repeat patterns for programming: Internationally, repeats are a part of the eco-system of multichannel television. It’s about giving audiences another opportunity to see programming – the chances of coming to something first time round is getting smaller by the day because of the increasingly-fragmented viewing environment. If, for example, you miss one or two episodes of a show with a strong narrative arc, it’s difficult to get into it. We’re seeing repeats and archive programming having more life. Having exclusively live content available costs billions and no broadcaster in the world has that kind of offering. The challenge for us is balancing fresh hours of content and archive programming, which is a fine balancing act. The key is that a repeat is not a repeat if you haven’t seen it!

Wangi Mba-Uzoukwa, M-Net Regional Director: West Africa on increasing the volume of local – specifically Ghanaian content – on MultiChoice Africa’s platforms: Speaking for Africa Magic, we have Ghanaian content on our channels. We were in Ghana to engage with stakeholders there – as we do in all our territories - about increasing the volume and quality of locally-produced content. We buy the content that is available, across the continent, if it meets specific criteria. As we continue to see content coming out of the regions, we will acquire. It’s always evolving and we’re trying to connect locally and we’re constantly looking at how to get more local content. Watch this space. There’s a lot we’re doing to drive development in West Africa, to build and create Ghanaian content we can show on our channels.

Tim Jacobs, CEO of MultiChoice Africa on a question about the offering of a sports-specific bouquet: That’s part of our product development. We listen to consumers, but it’s a different model to our current one. It has been used elsewhere on the continent. David and his team are constantly evaluating the viability, so it’s something we’re considering, but it’s not imminent.

David Booth, Chief Content Officer on MultiChoice Africa’s bouquet structure, linked to the question about a sports-specific bouquet: We’re looking at current bouquet structure and the added value we can offer. I truly believe that in the next couple of years, we can add even more value in our current structure. In the next 6-12 months we’ll have more strategic channels coming in across the bouquets. We’ll see how they settle and how the market reacts, and make decisions based on that. We’re always looking at trends. We’re not in a position at this time to go that far (to introduce a sports-specific bouquet). There’s always a chance to improve our content and quality and over the next two years, we’ll see how it goes.

Theo Erasmus, M-Net Regional Director: East and Southern Africa and Lusophone countries on content development in East Africa:  It’s very exciting that we’re seeing the same production culture developing as we have in Nigeria and West Africa, over the last few years. West Africa currently leads the way in terms of volume of production. The production volumes are currently smaller in East and Southern Africa, but we’re focusing on launching channels for those markets because the content is starting to bubble under and it needs a showcase – we want to be there.

Wangi Mba-Uzoukwa, M-Net Regional Director: West Africa on the rollout of Maisha Magic to the rest of the continent: When we launch channels, we follow a process. At the moment, Maisha Magic is only available in East Africa because that’s where the biggest audience is. It doesn’t mean it is cast in stone - we continue to evaluate whether the rest of Africa would like to see it, and we’ll make a decision based on that.

Tim Jacobs, CEO of MultiChoice Africa on dealing with competition from other content provision services: Over The Top (OTT) offerings like Netflix are sometimes a substitute and sometimes a complement to FTA (Free To Air) broadcasting. We find that Netflix is complementary because the bulk of linear TV is not consumed by younger viewers. The challenge for OTT in Africa is cost and accessibility – you can’t watch long-play streaming video over a mobile network because of the expense. There is a window of opportunity in most territories that will take time to penetrate. It’s something we have to compete with. It’s also important to note that OTT is not a regulated space because it’s online. How our parent company Naspers has dealt with this is launching a product like ShowMax in South Africa. It competes against us (MultiChoice), and tries to eat our lunch. Naspers is throwing a direct competitor to cannibalise our audience as fast as it can and we have to deal with that.

Tim Jacobs, CEO of MultiChoice Africa on catering for Ethiopian-language viewers: In terms of how we roll out product and content, our teams do a lot of research into deciding what to launch next. The vision is to really have a channel that caters for every specialist niche market or language group across the continent. The process is complicated because it needs to be based on a business decision linked to the number of subscribers across the continent. For example, the Ethiopian population is very big, but commercially it’s not a big territory for us yet. The decision to service markets in their local language hinges on the commercial reality of when we get enough subscribers to warrant it. We have a team evaluating opportunities like this, constantly and it’s a concern for all our territories. We have a deep interest in understanding how to make content resonate with local audiences.

Tim Jacobs, CEO of MultiChoice Africa on piracy: Piracy is a massive threat to broadcasters and rights holders, worldwide. Pirates are only about enriching themselves. We work with rights holders and broadcasters to stop it, but it’s a moving target because their infrastructure means they can open new portals as we shut others down. It’s not easy to evaluate how big the impact is, since by definition, a lot of it is underground and spread through social media. Sometimes the challenge is broader - certain competitors broadcast a beam that comes down into Africa. If you have that decoder and smart card that can pick up a service that is not designed to be broadcast in African territories, that’s also piracy because the rights for that territory either haven’t been assigned or they’re owned by a mainstream service.

David Booth, Chief Content Officer on pop-up and events channels: We want to be more fluid and offer more pop-up and events channels - it’s very much part of our strategy. We have big plans over the holiday period to bring in a kids’ channel from Turner Broadcasting, for example. Going forward, I see events channels offering fantastic opportunities. The Star Wars channel is an experiment, and it’s also something we’ve done in the past with Big Brother. It’s our ambition to do four more pop-up and events channels in the next year.

Wangi Mba-Uzoukwa, M-Net Regional Director: West Africa on the balance between the commissioning of in-house vs independent productions: We make productions in-house, but also commission, do co-productions and acquire content from elsewhere. You can’t generate enough content in-house. We need multiple production platforms to be able to service our subscribers with the quality content they desire. Our premise is that our content is created by Africa, for Africa, and we continue to nurture and build creative talent, in the hope of developing future producers and directors. We invest in building them up to the quality standards we want. A good mixture of in-house and commissioned content also allows for greater variety and allows us to engage with audience and local producers - that’s how we build talent on the continent. As the Maisha Magic channels roll out, our business model is to nurture local producers. Once the channels are off the ground, that’s a strong focus for us.  

Tim Jacobs, CEO of MultiChoice Africa on the potential for a premium offering on GOtv: The market for GOtv is specific, and targeted at viewers sitting on analogue signals. This is a sector of the population that has never engaged on Pay TV. They get a rich experience on a digital platform but at a price point that’s at the bottom of the affordability scale. If you start to move up the value chain, you start to confuse the market between the DStv product, which is aspirational and high-value, and GOtv which is a fun, new, mass-market product. There’s also a capacity on DTT that’s much more restrictive than what we have on satellite, so there are also technical reasons to why we have to be more cautious.

Tim Jacobs, CEO of MultiChoice Africa on Pay-Per-View offerings: Pay-Per-View sounds attractive, but it’s actually a red herring. An easy example is the Mayweather/Pacquiao boxing match earlier this year. It sold on Pay-Per-View across the world – in the USA at USD99 for 3-4 hours of viewing. Across the continent, subscribers pay less than that for DStv Premium for a whole month of viewing across all our channels – and in this instance, that included that fight, which was broadcast on SuperSport. That’s the benefit of scale for us. If you segment sports, for example the EPL, the reality is that the cost of that is much higher than everyone thinks because you need to divide up those expensive rights between a much smaller viewing population, so the cost goes up exponentially. That doesn’t mean we’re not looking at Pay-Per-View as an option – we need to be flexible and we get a lot of requests for it. We’re watching consumer demand and looking at whether it’s economically viable. It’s not on the cards right now, though, but we do have a research team trying to work that out.

The MultiChoice Africa Content Showcase is a dynamic 5-day content extravaganza, which sees a host of DStv’s biggest channels, including Sony, SuperSport, Zee World, A+E, Disney, MTV Base, BET, Comedy Central, BBC and M-Net previewing their latest and greatest content, soon to be seen across the video entertainment services provider’s platforms.