While pay TV is still growing in Africa, MultiChoice says it sees the total addressable market (TAM) in Africa growing at an annual compound growth rate of 3% over the next four years.
According to reports, South Africa’s market could be euphemistically described as ‘mature’. The only growth is at the lower end of the market, around US$5.05 a month. The upper and middle segments are in decline.
MultiChoice has warned that sustained load shedding has hurt the business recently. Moreover, dividends from the South African business and technology unit Irdeto meant US$253 million in cash was available to the group in the past year.
In theory, the plan is simple. Use this cash, as well as increased debt, to rapidly diversify beyond pay TV. The plan focuses on four verticals: streaming (Showmax), sports betting, fintech and home services.
The last of these is where it has mostly been fiddling around the edges. Selling decoder insurance and emergency response services (Namola) and reselling fibre/mobile internet packages in SA will hardly move the needle materially.
With global provider Rapyd and venture capital funder General Catalyst, it has entered the payments space. It owns 26% of the joint venture, Moment.
Right now, the most significant opportunity is cost savings for the group by shifting DStv subscription payment processing onto this platform. The long-term opportunity is enormous, but finding space in a market increasingly dominated by mobile operators will be challenging.
Showmax, which is being inserted into a joint venture with Comcast/NBC Universal/Sky, will become a far better and more formidable competitor to other streaming players.
Versus its original estimates for the next ten years, the group now sees more than three times the number of subscribers for the service. It also expects the business to be profitable within the next three years.
This should offset some of the declines in the linear TV business.
The group finally acquired the Nigerian sports betting business, KingMakers, in two transactions in 2020 and 2021. It paid US$393 million for a 49% stake.
It will operate in SA under the ‘SuperSport Bet’ brand, and its entry, where it will face two formidable market leaders in Betway and Hollywoodbets, is imminent.