French television and streaming giant, Canal+ could be forced to attempt a takeover of pay-television giant, MultiChoice to build a “quasi-monopoly” at a time PwC has projected South Africa’s entertainment industry to hit R231 billion in value.
MultiChoice last year announced a streaming partnership with Comcast’s NBCUniversal as it takes streaming competition directly to rivals such as Netflix. And Despite suffering a 7% decline in subscriber numbers in the South Africa market between the first and third quarters of 2023, MultiChoice is seeking to revamp its offerings through next month’s relaunch of Showmax, helping it broaden its opportunities.
But for Canal+, which already holds a 31.7% stake in the South African pay television company, a critical consideration would be to raise its shareholding and ultimately attempt a take-over of MultiChoice, said Lea Zouein, an analyst with Dataxis.
“A critical consideration is the strategic positioning that Canal+, holding a 31.7% stake in MultiChoice, will adopt. If the French company chooses to amplify its investment in the South African giant, it would have no choice, but to follow the local regulations and attempt a takeover, potentially leading to the establishment of a quasi-monopoly in the region,” explained Zouein.
MultiChoice is banking on its vast experience and understanding of the South African and wider African market to put it ahead of newer rivals although there have been complaints from viewers about outdated content while it had to strike a last minute deal to broadcast the Africa Cup of Nations via SuperSport
In the words of MultiChoice group CEO, Calvo Mawela, “Nobody understands Africa like we do” and Canal+ may just well try to capitalise on this should it decide to have a bigger presence in South Africa and on the continent through the acquisition of MultiChoice.
The re-launch of Showmax, whose mobile app goes online January 23 before official launch on February 12, has provided fresh impetus to MultiChoice, which has been battling load-shedding and suppressed disposable incomes in the South Africa market.
The pay-television giant, which told Business Report last year that its Zimbabwe operation was was better than the lucrative Nigeria market in terms of recouping earnings, will be banking on the 450 million Africans who own mobile smartphones but may find data affordability to be a drawback.
Data from Dataxis, however, shows that countries such as South Africa could be better off, with a smartphone population penetration exceeding 50% and the expansion of 4G and 5G networks gathering momentum.
“The growing number of offerings exacerbates the challenge for platforms to provide an increasingly compelling service to retain subscribers; hence the forthcoming relaunch of a new, more complete version of Showmax,” said Zouein.
Whether the relaunched Showmax will attract subscribers away from Netflix remains to be seen.
In South Africa and as of October 2023, Netflix boasted 8371 titles, encompassing 7 513 national exclusivities and 4 783 international exclusivities.
Showmax on the other hand, boasted of a selection of 3020 titles, featuring 2178 South African exclusivities and 576 world exclusivities.
“Not only does Netflix have a well-stocked catalogue of international content, but the American platform is also investing more and more in the production of local content. Since its market entry in 2016, the platform has allocated $175 million (R3.3bn) towards content production in South Africa, Nigeria, and Kenya, with South Africa receiving over $125 million of this investment. ”
Intense competition among international streaming platforms that also include Disney+ and Paramount, which will launch this year, has been stirring up growth in South Africa’s on-demand and streaming sector.
Analysts from PwC say this will boost revenues in the country’s media and entertainment (M&E) market by 5.5% to R231bn over the next five years.
The competition for the attention of consumers by global video streaming and video on demand giants in South Africa is “heightening” with revenue from this also gathering momentum. The “steady flow of new entrants” had provided impetus to this, PwC said.