Global streaming service Netflix launched in South Africa in 2016 to rave review from subscribers. But the introduction of an alternative entertainment platform may have been detrimental for subscription satellite-service operator MultiChoice.
According to an estimate released by MyBroadBand earlier this year, Netflix has grown to between 300,000 and 400,000 subscribers in South Africa since its arrival.
At the time, MultiChoice said DStv's subscriber base had been growing, but only for the company's lower-tier, lower-margin packages such as DStv Access.
WorldWide Worx managing director Arthur GoldStuck told HuffPost that although it may seem as though MultiChoice is under threat, there are many factors that will stop a large number of South Africans from joining the online streaming bandwagon... at least, not right away.
"Our latest research shows that in the U.S. next year, people will spend more time on the internet than watching TV for the first time in history. So that is the beginning of that trend, and eventually it will reach South Africa as well," he said. But there is a glitch.
"The majority of the population can't support broadband internet, which is what you need for video on demand," he elaborated.
I think that the format of DStv will change fairly dramatically.Media Monitoring Africa director Willam Bird
Goldstuck says Netflix is more affordable, but it would not be a first choice for people who are sports fans or want to watch the news.
"That is the only area where pay TV still has an advantage over video on demand," he said.
MultiChoice launched its streaming service, ShowMax, in 2015 and made it available at no extra cost to DStv Premium subscribers last year, but Goldstuck says it is not in the same league as Netflix.
"The reality is that at the moment, ShowMax cannot compete with Netflix in terms of quantity and quality of content," he said.
Media Monitoring Africa director Willam Bird says MultiChoice will have to make changes if it wants a longer lifespan.
"I think that the format of DStv will change fairly dramatically," he said.
He makes an example of how the company can find middle ground: "The U.K. for example, have got a BBC iPlayer, where you can go and find programmes by genre. I think you still have that appointment-viewing scheduled content, so those things don't go away; they get used by different audiences in different ways," Bird said.
Regulating streaming services
Goldstuck explains that it would be difficult for South Africa to regulate Netflix.
"It will be difficult to regulate a platform that is from another country. The reality is that Netflix does not generate advertising, so it does not require payments to be made in South Africa."
He says the only possible way could be if the South African Revenue Service (Sars) were to handle the matter.
"Because people have to pay for a monthly subscription, those funds are coming from our financial system. That means Sars should handle it, but that is unlikely," he said.
However, Bird says there should be some type of regulation for the U.S.-based streaming service.
"I think that [if] people are coming in and making money off South African audiences, it should be required that any company that comes in to South Africa and extracts value needs to comply with our laws. They should adhere to transformation goals and guidlines, I think that they should also be expected to adhere to our other constitutional principles."