Naspers freezes prices to win back DSTV subscribers

Although video streaming services in Africa are struggling with connectivity as they try to expand across the continent, pay television businesses have lost subscribers to them.

Naspers Ltd., Africa’s biggest company by market value, expanded its video-streaming service ShowMax into 36 new sub-Saharan African countries earlier in the year, also doubling the number of active subscribers in the first four months of 2016. But Naspers has seen its pay-TV business struggle, with subscription numbers falling by 288,000 in 2016.

However, the South African company has more than video streaming services to blame for the decline in subscription numbers; weaker currencies and lower economic growth in commodity exporting economies such as Angola, Zambia and Nigeria have hurt business, according to Chief Executive Bob van Dijk.

Naspers want the decline in subscription numbers to stop. It has, therefore, frozen prices on the continent.

“The currency decline has been massive and that really hurts us because we bill in local currency,” Bob van Dijk, Naspers’ chief executive told Reuters on Monday.

“We’ve frozen the prices of our products in local currency.

“That’s a big deal if you’re in a scenario with local currency still deteriorating like the naira just did,” he said.

Pay-TV used to be Naspers’ major revenue earner, but this had since changed, with its Internet business now accounting for more than two thirds of revenue.

In a bid to win back its lost market, Naspers is also adding programming to some of its products aimed at the lower market on its pay-TV network, DSTV, which is Africa’s biggest.

The company have been at odds with consumers and regulators in recent times over subscription costs. The pay-TV network had increased subscription costs by 20 percent in Nigeria last year and has carried out similar hikes across the continent since then, to the displeasure of consumers who claim they are not getting value for what they pay. One of the issues raised by consumers in Nigeria, which became a subject of discussion at the parliament, was the pay-as-you-use-model. However, the pay-TV company says its business model, for now, does not accommodate pay-as-you-watch which it explains is being mistaken for pay-per-view.

“Anywhere in the world, pay per view is materially more expensive for the person who wants to watch only that piece of content, than binding all the content together and spreading over the time market. It is just a mathematical calculation; it is not that complicated,” Tim Jacobs, chief executive officer of Multichoice, a subsidiary of Naspers which operates DSTV, in an interview published last October.

But cable TV prices hike is not limited to Africa; cable costs in other parts of the world have also grown astronomically as a result of monopoly. Huge price increases have, therefore, made customers to flee. In the third quarter of 2015, pay TV lost 300,000 subscribers in the United States. Most of these subscribers moved to more affordable streaming services like Netflix and the live streaming service Sling TV. Similar switch is being witnessed in Africa now.

While Naspers is doing its best to stop further decline in subscriber numbers in its pay-TV service, the South African company says it expects a difficult few years in sub Saharan Africa.