MultiChoice, which operates DStv, claims it lost over 100000 DStv Premium subscribers in its last financial year from the “unregulated” competition it faces face from “over-the-top” (OTT) internet streaming services like Netflix.
This was revealed on Friday by MultiChoice SA’s chief executive Calvo Mawela who presented his argument to Icasa’s panel on the final day of the communications regulator’s public hearings.
Icasa’s public hearings, held from Monday, were an enquiry into subscription TV broadcasting services.
Icasa is looking to address MultiChoice’s “market dominance” by further regulating the firm. However, MultiChoice has argued that if Icasa proceeds with more regulations, it will kill DStv’s business and hand the South African market to the online streaming giants.
According to MultiChoice, Netflix and other international streaming companies “do not pay tax” in South Africa and also don’t contribute levies to organisations such as the Media Development and Diversity Agency or Universal Service and Access Agency of SA, nor do they pay broadcasting licence fees.
MultiChoice argued to Icasa’s council that it must not go overboard with regulations, and that whatever it implements should apply to the whole pay-TV sector - including services like Netflix.
“We understand that OTTs have come into the market and they have had serious growth and their revenue figures have substantiated that,” said Nomonde Gongxeka-Seopa, an Icasa panel member.
“What we are missing, though, is how this had an impact on the pay-TV market, which you haven’t provided us with. You have provided us with graphs on how OTTs have affected pay-TV stations in countries like the UK and the US, but we need research within the South African market to convince us that these OTTs are actually competing with pay TV.”
Icasa has given MultiChoice until May 31 to provide it with “empirical evidence” that there is a direct link between the presence of OTTs and its drop in revenue and subscriber numbers before they make a decision whether it will further regulate pay-TV stations.
“We need to see that there is a direct link between the presence of OTT and your revenue and your subscriber base in such a way they are really significantly impacting on the competition dynamics specifically for the SA market.”
Mawela warned Icasa that heavy-handed regulations for the pay-TV market could cost thousands of jobs.
“Netflix will never employ a lot of people around the world like we have. It employs around 4000 people for the whole group,” said Mawela. MultiChoice has 8000 employees in South Africa. He said most of its staff were black, and that most of the people it employs are women.
MultiChoice SA chief operating officer Mark Rayner believed that OTTs would fundamentally disrupt the pay-TV industry and that Icasa was not paying enough attention to these developments. “It’s possible that the economic climate might have changed in that time and that is why you may have experienced a loss of subscribers,” said Botlenyana Mokhele, an Icasa panel member.